EXHIBIT 10.1
SHARE PURCHASE AGREEMENT
This SHARE PURCHASE AGREEMENT ("AGREEMENT") is made and entered into in
the City of Montreal, Quebec, Canada, on the 2nd day of January, 2005.
BY AND AMONG: XXXX XXXXXXXX, businessman, residing and domiciled at 000 Xxx
Xxxx Xxxxxx, Xxxxx-Xxxxx de Montarville, Province of Quebec,
J3V 5G5
("X. XXXXXXXX")
AND: XXXXX XXXXXXXXX, businessman, residing and domiciled at 000
Xxxx xx Xxxxxxxxx Xxxxxx, Xxxxxx-Xxxxx, Xxxxxxxx xx Xxxxxx,
X0X 0X0
("X. XXXXXXXXX")
AND: XXXXXX XXXXXXX, businesswoman, residing and domiciled at 000
Xxx Xxxx Xxxxxx, Xxxxx-Xxxxx de Xxxxxxxxxxx, Xxxxxxxx xx
Xxxxxx, X0X 0X0;
("X. XXXXXXX")
AND: 0000-0000 XXXXXX INC., a corporation duly incorporated under
the Quebec Companies Act, having its head office at 443 Des
Pins Street, Saint-Bruno de Montarville, Province of Quebec,
J3V 5G5, herein represented by Xxxx Xxxxxxxx, its President,
duly authorized in virtue of a resolution of the Board of
directors dated January 2, 2005;
("XXXXXXXX HOLDCO")
AND: 0000-0000 XXXXXX INC., a corporation duly incorporated under
the Quebec Companies Act, having its head office at 000 Xxxx
xx Xxxxxxxxx Xxxxxx, Xxxxxx-Xxxxx, Xxxxxxxx xx Xxxxxx, X0X
0X0, herein represented by Xxxxx Xxxxxxxxx, its President,
duly authorized in virtue of a resolution of the Board of
directors dated January 2, 2005;
("LACHAMBRE HOLDCO")
(individually referred herein to as the "VENDOR" and
collectively referred to herein as the "VENDORS").
AND: TECKN-O-LASER GLOBAL COMPANY, a Nova Scotia unlimited
liability company carrying on the business previously carried
on by Teckn-O-Laser Global Inc. with its principal executive
offices at 0000-X, xxx Xxxxx, Xxxxxx Xxxxx, Xxxxxx, X0X 0X0,
herein represented by Xxxx
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Xxxxxxxx, its President, duly authorized in virtue of a
resolution of the Board of directors dated January 2, 2005;
("ACQUIREE")
AND: TECKN-O-LASER COMPANY, a Nova Scotia unlimited liability
company resulting from the amalgamation of 3191501 Nova Scotia
Limited and Teck-O-Laser Inc., a company originally
constituted under the CANADA BUSINESS CORPORATIONS Act and
continued under the laws of Nova Scotia with its principal
executive offices at 0000-X, xxx Xxxxx, Xxxxxx Xxxxx, Xxxxxx,
X0X 0X0, herein represented by Xxxx Xxxxxxxx, its President,
duly authorized in virtue of a resolution of the Board of
directors dated January 2 2005;
("TOL CANADA")
AND: 3091503 NOVA SCOTIA COMPANY, a Nova Scotia unlimited liability
company with its principal executive offices at 00 Xxxxxxx
Xxxxxx, xxxxx 000, Xxxxxxx, Xxxxxxx, Xxxxxx X0X 0X0, herein
represented by Xxxxxxx Xxxxx, its President, duly authorized
in virtue of a resolution of the Board of directors dated
January 2, 2005;
("ACQUIROR")
AND: ADSERO CORP., a Delaware corporation with its principal
executive offices at 00 Xxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxx,
Xxxxxxx, Xxxxxx X0X 0X0, herein represented by Xxxxxxx Xxxxx,
its CFO, duly authorized in virtue of a resolution of the
Board of directors dated January 2, 2005;
("ADSERO")
AND: YAC CORP., a Delaware corporation, which is a wholly owned
subsidiary of Adsero, with its principal executive offices at
00 Xxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxx, Xxxxxx X0X
0X0, herein represented by Xxxxxxx Xxxxx, its CFO, duly
authorized in virtue of a resolution of the Board of directors
dated January 2, 2005;
("YAC")
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AND: 3091732 NOVA SCOTIA COMPANY, a Nova Scotia unlimited liability
company, which is a wholly owned subsidiary of YAC, with its
principal executive offices at 00 Xxxxxxx Xxxxxx, Xxxxx 000,
Xxxxxxx, Xxxxxxx, Xxxxxx X0X 0X0, herein represented by
Xxxxxxx Xxxxx, its President, duly authorized in virtue of a
resolution of the Board of directors dated January 2, 2005;
("CALLCO")
(Acquiror, Acquiree, TOL Canada, Callco, YAC, Adsero and the
Vendors are referred to individually herein as a "Party" and
collectively as the "Parties".
PREAMBLE
WHEREAS Adsero and certain of the Vendors have entered into a letter of
intent dated May 3, 2004 as amended and replaced on September 17, 2004 and
further amended on December 14, 2004 (the Letter of intent") pursuant to which
Acquiror has agreed to purchase all of the issued and outstanding shares of
Acquiree subject to and conditional upon the terms and conditions contained
therein;
WHEREAS TOL Canada is a wholly owned subsidiary of Acquiree;
WHEREAS TOL Canada is the only subsidiary of Acquiree;
WHEREAS the Vendors directly or beneficially own all of the issued and
outstanding shares in the share capital of Acquiree;
WHEREAS, in consideration of the Purchase Price (as defined herein) and
subject to the terms and conditions hereof, the Acquiror hereby purchases and
the Vendors hereby sell all of the Acquiree Preferred Shares and the Acquiree
Common Shares (as defined herein); and,
WHEREAS the Parties further desire to enter into a series of related
transactions, on the terms and conditions as set forth herein.
NOW, THEREFORE, in consideration of the respective covenants contained
herein and intending to be legally bound hereby, the Parties hereto agree as
follows:
ARTICLE I
DEFINITIONS
For convenience, certain terms used in this Agreement and not defined
above or elsewhere, are listed in alphabetical order and defined below (such
terms as well as any other terms defined elsewhere in this Agreement shall be
equally applicable to both the singular and plural forms of the terms defined):
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ALL REFERENCES TO CURRENCIES IN THIS AGREEMENT SHALL BE IN CANADIAN DOLLARS
UNLESS STATED OTHERWISE.
"ACQUIREE COMMON SHARES" means the Class "A" and Class "B" common shares in the
share capital of the Acquiree.
"ACQUIREE PREFERRED SHARES" means the Class "A", "B", "C", "D", "E",
and "F" preferred shares in the share capital of the Acquiree.
"ACQUIROR INDEMNIFIED PARTY" means each of Adsero, YAC, Callco and
Acquiror and each of its officers, directors, shareholders, employees,
agents and counsel.
"ACQUIROR SERIES I EXCHANGEABLE SHARES" means the Series I Exchangeable
Shares of the Acquiror, each of which is exchangeable at any time after
Closing, on a share for share basis, into Adsero Common Shares, the
whole as more fully described in the Series I Exchangeable Shares
Voting, Exchange and Support Agreement attached hereto as Schedule 1.A.
"ACQUIROR SERIES II EXCHANGEABLE SHARES" means the Series II
Exchangeable Shares of the Acquiror, each of which is exchangeable on a
share for share basis into Adsero Common Shares the whole as more fully
described in the Series II Exchangeable Shares Voting, Exchange and
Support Agreement attached hereto as Schedule 1.B.
"ACQUIROR PREFERRED SHARES" means the preferred shares in the share
capital of the Acquiror, the rights and attributes of which are
described in Schedule "A" of the Preferred Shares Purchase and Support
Agreement attached hereto as Schedule 1.C.
"ADSERO COMMON SHARES" means the common shares forming part of the
authorized share capital of Adsero and which are posted for trading on
the OTC Bulletin Board under the symbol ADSO.
"ADSERO SERIES A PREFERRED SHARES" means the voting preferred shares in
the share capital of Adsero as fully described in the Certificate of
Designation attached hereto as Schedule 2.11.2.2(b).
"ADSERO SEC REPORTS" means all required forms, reports, statements,
schedules and other documents filed with the SEC (including its most
recent annual and quarterly financial statements available as of the
date hereof).
"AFFILIATE" means, with respect to any Person, any other Person that
directly or indirectly controls or is controlled by or under common
control with such Person. For the purposes of this definition,
"control" when used with respect to any Person, means the possession,
direct or indirect, of the power to direct or cause the direction of
the management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise; and the terms
"affiliated," "controlling" and "controlled" have meanings correlative
to the foregoing.
"AGREEMENT" means this Share Purchase Agreement and the Schedules
hereto.
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"XXXXX XXXXXXXXX EMPLOYMENT AGREEMENT" means the employment agreement
attached hereto as Schedule 2.11.2.2(f).
"ASSETS" means, with respect to Adsero, Acquiror, Callco, YAC,
Acquiree, or TOL Canada, as shown by the context in which used, all of
the assets, properties, goodwill and rights of every kind and
description, moveable and immoveable, real and personal, tangible and
intangible, wherever situated and whether or not reflected in such
Party's most recent financial statements and to which such Party has
good and marketable title.
"BUSINESS" means with respect to any Party, the entire business and
operations of such Person.
"BUSINESS DAY" means any day except Saturday, Sunday and any day which
shall be a legal holiday or a day on which banking institutions in the
Province of Quebec generally are authorized or required by law or other
government actions to close.
"CANADIAN GAAP" means generally accepted accounting principles as
approved from time to time by the Canadian Institute of Chartered
Accountants or any successor institute, applied on a consistent basis.
"CHARTER DOCUMENTS" means a Person's certificate or articles of
incorporation or memorandum and articles of association, and any
amendments thereto.
"CLOSING" means the closing of the Transactions set forth herein held
on the date hereof at the offices of Xxxxxxxx Xxxxx in Montreal,
Quebec; the Closing shall be deemed completed only once all the
Transaction Documents have been executed and all acts and ancillary
documents contemplated in this Agreement shall have been completed to
the satisfaction of all Parties.
"CONTRACT" means any written or oral contract, agreement, letter of
intent, agreement in principle, lease, instrument or other commitment
that is binding on any Person or its property under applicable Law.
"COPYRIGHTS" means registered copyrights, copyright applications and
unregistered copyrights.
"COURT ORDER" means any judgment, decree, injunction, order or ruling
of any federal, state, local or foreign court or governmental or
regulatory body or authority, or any arbitrator that is binding on any
Person or its property under applicable Law.
"DEFAULT" means (i) a breach, default or violation, (ii) the occurrence
of an event that with or without the passage of time or the giving of
notice, or both, would constitute a breach, default or violation or
(iii) with respect to any Contract, the occurrence of an event that
with or without the passage of time or the giving of notice, or both,
would give rise to a right of termination, renegotiation or
acceleration or a right to receive damages or a payment of penalties.
"DGCL" means the Delaware General Corporation Law, as amended through
the date of this Agreement.
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"EBITDA" means the earnings before interest, taxes, depreciation and
amortization of Acquiree, TOL Canada and TOL USA as determined in
accordance with Schedule 1.D attached hereto.
"EFFECTIVE DATE" means January 2nd, 2005.
"ENCUMBRANCES" means any lien, mortgage, security interest, pledge,
restriction on transferability, defect of title or other claim, charge
or encumbrance of any nature whatsoever on any property or property
interest.
"ENVIRONMENTAL CONDITION" means any condition or circumstance,
including the presence of Hazardous Substances which does or would (i)
require assessment, investigation, abatement, correction, removal or
remediation under any Environmental Law or U.S. Environmental Law, as
the case may be, (ii) give rise to any civil or criminal Liability
under any Environmental Law or U.S. Environmental Law, as the case may
be, (iii) create or constitute a public or private nuisance or (iv)
constitute a violation of or non-compliance with any Environmental Law
or U.S. Environmental Law, as the case may be.
"ENVIRONMENTAL LAW" means the ACT RESPECTING THE QUALITY OF THE
ENVIRONMENT, R.S.Q. c. Q. 2 (Quebec), as amended from time to time (the
"Q.E.P.A."), and the CANADIAN ENVIRONMENTAL PROTECTION ACT, R.S.C. 1985
c. 16 (4th Supp.), as amended from time to time (the "C.E.P.A.") and
all applicable statutes, regulations, ordinances, by-laws and codes,
now in existence in Canada (whether federal, provincial or municipal)
relating to the protection and preservation of the environment, human
health and safety, or Hazardous Substances.
"ENVIRONMENTAL PERMITS" includes all orders, permits, certificates,
approvals, consents, registrations and licences issued by any authority
of competent jurisdiction under Environmental Laws or U.S.
Environmental Law, as the case may be.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"GOVERNMENTAL AUTHORITY" means any federal, state, local, municipal or
foreign or other government or governmental agency or body.
"HAZARDOUS SUBSTANCES" means any material, waste or substance
(including, without limitation, any product) that may or could pose a
hazard to the environment or human health or safety including, without
limitation, any contaminant, toxic substance, dangerous goods or
pollutant or any other substance which when released to the natural
environment is likely to cause, at some immediate or future time,
material harm or degradation to the natural environment or material
risk to human health as the whole is regulated under any laws or court
orders.
"IMMOVEABLE PROPERTY" means all immoveable property of the Acquiree and
any title or interest therein, all of which are described in Schedule
4.8 attached hereto;
"INTELLECTUAL PROPERTY" means any Copyrights, Patents, Trademarks,
technology, licenses, trade secrets, computer software and other
intellectual property.
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"KNOWLEDGE" of any Person means that which such Person actually knows
or, after diligent investigation commensurate with such Person's
position with another Person, should have known.
"LAW" means any statute, law, ordinance, regulation, order, rule,
common law principles or consent agreements of any Governmental
Authority, including, without limitation, those covering environmental,
energy, safety, health, transportation, bribery, record keeping,
zoning, anti-discrimination, antitrust, wage and hour, and price and
wage control matters.
"LEASED PREMISES" means all premises leased by Acquiree or its
Subsidiary under the Leases;
"LEASES" means the leases and the agreements to lease under which
Acquiree or its Subsidiary leases any real property, as listed in
Schedule 4.23 attached hereto;
"LIABILITY" means any direct or indirect liability, indebtedness,
obligation, expense, claim, loss, damage, deficiency, guaranty or
endorsement of or by any Person.
"LITIGATION" means any lawsuit, action, arbitration, administrative or
other proceeding, criminal prosecution or governmental investigation or
inquiry.
"LOCK-UP AGREEMENT" means the agreement attached hereto as Schedule
2.11.2.1(b).
"MATERIAL ADVERSE EFFECT" means a fact or event which has had or is
reasonably likely to have a material adverse effect on the Assets,
Business, financial condition or results of operations of a Party, as
the case may be, as indicated by the context in which used, and when
used with respect to representations, warranties, conditions, covenants
or other provisions hereof means the individual effect of the situation
to which it relates and also the aggregate effect of all similar
situations unless the context indicates otherwise.
"PATENTS" means patents, patent applications, reissue patents, patents
of addition, divisions, renewals, continuations, continuations-in-part,
substitutions, additions and extensions of any of the foregoing.
"PERSON" means an individual or a corporation, partnership, trust,
incorporated or unincorporated association, joint venture, limited
liability company, joint stock company, government (or an agency or
political subdivision thereof) or other entity of any kind.
"PREFERRED SHARES PURCHASE AND SUPPORT AGREEMENT" means the agreement
governing the Acquiror Preferred Shares and attached hereto under
Schedule 1.C and dated January 2, 2005.
"PROCEEDING" means an action, claim, suit, investigation or proceeding
(including, without limitation, an investigation or partial proceeding,
such as a deposition), whether commenced or threatened.
"REGULATION" means any federal, state, local or foreign rule or
regulation.
"SCHEDULE" means any Schedule attached to and forming part of this
Agreement.
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"SEC" means the United States Securities and Exchange Commission.
"SECURITIES LAWS" means any applicable laws, statutes, regulations,
by-laws, guidelines, national instruments in force in any jurisdiction
of Canada or United States which are applicable to any Party hereof and
to the issuance of any security;
"SERIES I EXCHANGEABLE SHARES VOTING, EXCHANGE AND SUPPORT AGREEMENT"
means the agreement governing the Acquiror Series I Exchangeable Shares
attached hereto under Schedule 1.A and dated January 2, 2005.
"SERIES II EXCHANGEABLE SHARES VOTING, EXCHANGE AND SUPPORT AGREEMENT"
means the agreement governing the Acquiror Series II Exchangeable
Shares attached hereto under Schedule 1.B and dated January 2, 2005.
"SUBSIDIARY" means any corporation or other legal entity of which
Adsero, YAC, Callco, Acquiror or Acquiree, as the case may be (either
above or through or together with any other Subsidiary) owns, directly
or indirectly, more than 50% of the stock or other equity interests the
holders of which are generally entitled to vote for the election of
directors or other governing body of such corporation or other entity.
"TAXES" means any and all federal, provincial, state, municipal, local
and foreign taxes, assessments and other governmental charges, duties,
impositions, levies and liabilities, including, without limitation,
taxes based upon gross receipts, assets, transfer taxes, income,
profits, sales, use and occupation, and value added, ad valorem,
transfer, gains, franchise, withholding, payroll, recapture,
employment, excise, unemployment, insurance, social security, business
license, occupation, business organization, stamp, environmental and
property taxes, together with all interest, penalties and additions
imposed with respect to such amounts.
"TAX RETURN" means any report, return, election, notice, estimate,
declaration, information statement and other forms and documents
(including all schedules, exhibits and other attachments thereto)
relating to and filed or required to be filed with a taxing authority
in connection with any Taxes (including, without limitation, estimated
Taxes).
"TOLG" means Teckn-O-Laser Global Inc., a company incorporated under
Part IA of the COMPANIES ACT (Quebec).
"TOL USA" means Tecknolaser USA Inc., a wholly owned subsidiary of
Adsero.
"TRADEMARKS" means registered trademarks, registered service marks,
trademark and service xxxx applications and unregistered trademarks and
service marks.
"TRANSACTION DOCUMENTS" means this Agreement and the other agreements
described in Article II.
"TRANSACTIONS" means the transactions herein contemplated.
"U.S. ENVIRONMENTAL LAWS" means all applicable statutes, regulations,
ordinances, by-laws, codes and common law principles, and all
international treaties and agreements, now in existence in the United
States (whether federal, state or municipal) relating to the
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protection and preservation of the environment, human health and safety
or Hazardous Substances.
"XXXX XXXXXXXX EMPLOYMENT AGREEMENT" means the employment agreement
attached hereto as Schedule 2.11.2.2(e);
SCHEDULES:
This Agreement incorporates the following schedules which the parties
acknowledge are an integral part hereof:
SCHEDULE 1.A SERIES I EXCHANGEABLE SHARES VOTING AND SUPPORT
AGREEMENT
SCHEDULE 1.B. SERIES II EXCHANGEABLE SHARES VOTING AND SUPPORT
AGREEMENT
SCHEDULE 1.C PREFERRED SHARES PURCHASE AND SUPPORT AGREEMENT
SCHEDULE 1.D. EBITDA
SCHEDULE 2.1 ISSUED AND OUTSTANDING SHARES OF ACQUIREE
SCHEDULE 2.2 PURCHASE PRICE
SCHEDULE 2.3 PAYMENT OF PURCHASE PRICE
SCHEDULE 2.3 A ADSERO SERIES A PREFERRED SHARES
SCHEDULE 2.8 AGREED AMOUNT
SCHEDULE 2.10 STOCK OPTIONS
SCHEDULE 2.11.2.1(B) LOCK-UP AGREEMENT
SCHEDULE 2.11.2.2(B) ADSERO SERIES A PREFERRED SHARE DESIGNATION
SCHEDULE 2.11.2.2(E) XXXX XXXXXXXX EMPLOYMENT AGREEMENT
SCHEDULE 2.11.2.2(F) XXXXX XXXXXXXXX EMPLOYMENT AGREEMENT
SCHEDULE 3.5.3 ADSERO OUTSTANDING OPTIONS, WARRANTS AND CALLS &
OTHER COMMITTED ISSUANCES
SCHEDULE 3.6 ADSERO FINANCIAL STATEMENTS
SCHEDULE 3.15(H) EXCEPTIONS TO SECTION 3.15(H)
SCHEDULE 3.17 FINDER'S FEES
SCHEDULE 4.4.1 ACQUIREE CAPITALIZATION AND OWNERSHIP
SCHEDULE 4.8 IMMOVEABLE PROPERTY
SCHEDULE 4.8.2 TITLES TO ASSETS AND RELATED MATTERS
SCHEDULE 4.9.5 ENVIRONMENTAL PERMITS
SCHEDULE 4.9.6 HAZARDOUS SUBSTANCES
SCHEDULE 4.10.2 CAPITAL EXPENDITURES
SCHEDULE 4.11 EMPLOYEES
SCHEDULE 4.13.1 EMPLOYEE RELATIONS
SCHEDULE 4.14 PROFIT SHARING PLAN
SCHEDULE 4.15.1 INTELLECTUAL PROPERTY
SCHEDULE 4.15.2 INTELLECTUAL PROPERTY AGREEMENTS
SCHEDULE 4.23 LEASES
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ARTICLE II
PURCHASES, SALES AND
CANCELLATIONS OF SHARES, ISSUANCE OF
STOCK OPTIONS, AND RELATED
TRANSACTIONS
2.1 SALE AND PURCHASE OF SHARES OF ACQUIREE
Subject to the terms and conditions set forth in this Agreement, the
Vendors hereby, on the Effective Date, sell to the Acquiror 100% of the Acquiree
Common Shares and 100% of the Acquiree Preferred Shares all of which are listed
in Schedule 2.1 annexed hereto, being all of the issued and outstanding shares
in the share capital of the Acquiree.
2.2 PURCHASE PRICE
The purchase price (the "PURCHASE PRICE") for the Acquiree Common
Shares and the Acquiree Preferred Shares is the amount outlined in Schedule 2.2
attached hereto.
2.3 PAYMENT OF PURCHASE PRICE
Payment of the Purchase Price shall be effected in the following manner
and apportioned in accordance with Schedule 2.3 attached hereto:
(a) on Closing by
i) the issuance to the Vendors of 6,500,000 Acquiror
Series I Exchangeable Shares of which 6,000,000 will
be subject to the Lock-Up Agreement; and
ii) the issuance to the Vendors of 1,932,000 Acquiror
Preferred Shares;
iii) the payment of the sum of $750,000.
(b) on subsequent dates by:
i) a cash payment in the amount of $2,182,000 on March
31, 2006;
ii) a cash payment in the amount of $1,000,000 on March
31, 2007; and,
iii) a cash payment in the amount of $1,000,000 on March
31, 2008.
2.4 ADJUSTMENTS TO PURCHASE PRICE
2.4.1 In the event where the EBITDA for the financial year ending
December 31, 2005 is less than $1 million, the Purchase Price
shall be reduced by the amount payable under Section 2.3(b)(i)
and no further payment will be due under this Section 2.3 (b)
(i);
2.4.2 In the event where the EBITDA for the financial year ending
December 30, 2006 is less than $1.5 million, the Purchase
Price shall be reduced by the amount
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payable under Section 2.3(b)(ii) and no further payment will
be due under this Section 2.3 (b) (ii);
2.4.3 In the event where the EBITDA for the financial year ending
December 29, 2007 is less than $2 million, the Purchase Price
shall be reduced by the amount payable under Section
2.3(b)(iii) and no further payment will be due under this
Section 2.3 (b) (iii).
No pro rata payments will be due to the Vendors in the event where the EBITDA is
less than the above-stated amounts for the above-stated periods.
2.5 VENDORS CONVERSION OPTION
Subject to the provisions of the Series I Exchangeable Shares Voting,
Support and Exchange Agreement, the Vendors will have the option of converting
any payments due under Section 2.3(b) into Acquiror Series I Exchangeable
Shares.
Should the Vendors exercise such option, any payment or portion thereof
will be settled by the issuance of that number of Acquiror Series I Exchangeable
Shares calculated by dividing the dollar amount of such payment by an amount
representing the greater of US$1.00 converted to Canadian dollars or 80% of the
average closing price of Adsero Common Shares converted to Canadian dollars for
the twenty (20) trading days immediately preceding the date on which the
Acquiror will have received a notice in writing advising it of a Vendor's
decision to exercise its option to convert. The applicable currency exchange
rate will be the offered rate of Acquiror's principal bank on the date of
receipt by Acquiror of the above-mentioned notice. No fractional Series I
Exchangeable Shares will be issued; any amounts representing such fractions will
be paid in cash.
2.6 VENDORS ACKNOWLEDGEMENT
The Vendors recognize and hereby agree that the value assigned to the
Acquiror Series I Exchangeable Shares is based on the price of the Adsero Common
Shares which is a publicly traded security whose price is subject to market
volatility and that neither Adsero nor the Acquiror make any representations or
warranties as to the future market price of the Adsero Common Shares.
2.7 PRESCRIBED CHOICES
The Acquiror and the Vendors hereto agree to effect all choices and
necessary elections in the prescribed time period and forms, in accordance with
the rules provided for in Section 85(1) of the INCOME TAX Act (Canada) and in
Section 518 of the TAXATION ACT (Quebec).
2.8 AGREED AMOUNT
The Acquiror and the Vendors establish the agreed amount in order of
the Section 85(1) of the INCOME TAX ACT (Canada) and the Section 518 of the
TAXATION ACT (Quebec) as outlined in Schedule 2.8 attached hereto.
2.9 FORMS
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The Acquiror and the Vendors agree to do and sign any form or document
which may be necessary or useful to make the choices provided for in Section
85(1) of the INCOME TAX ACT (Canada) and the Section 518 of the TAXATION ACT
(Quebec).
2.10 STOCK OPTIONS
Subject to the terms and conditions set forth in this Agreement and
subject to the Adsero stock option plan (the "STOCK OPTION PLAN"), at Closing,
Adsero shall, upon regulatory approval, issue an aggregate of 300,000 stock
options (the "STOCK OPTION(S)") to employees of TOL Canada, a list of whom is
annexed hereto as Schedule 2.10. Each optionee is currently an employee of TOL
Canada and shall continue to be so at the time of the Stock Option grant. Each
Stock Option will be exercisable to purchase one Adsero Common Share for a
period of 10 years from the date of grant (the "GRANT DATE") at an exercise
price equal to the market price of the Adsero Common Shares at the time of the
Closing. The Stock Options so granted will vest at a rate of one third (1/3) of
the Stock Options so granted to each employee of TOL Canada on each of the
first, second, and third anniversaries of the Grant Date.
2.11 CLOSING
2.11.1 PLACE AND CLOSING
The closing deliveries shall take place and shall be held at
the offices of Xxxxxxxx Xxxxx in Montreal, Quebec.
2.11.2 CLOSING DELIVERIES
2.11.2.1 DELIVERIES IN FAVOUR OF ADSERO AND THE ACQUIROR
The obligation of the Acquiror to purchase the issued and
outstanding securities of the Acquiree shall be conditional
upon receipt of the following on Closing:
a) Share certificates evidencing in the aggregate 100% of the
issued and outstanding Acquiree Common Shares and Acquiree
Preferred Shares in negotiable form, duly endorsed in blank,
or with stock transfer powers attached thereto;
b) Lock-Up Agreement in the form set out in Schedule
2.11.2.1(b) duly executed by each of the Vendors;
c) Certificate executed by each of the Vendors and the
Acquiree certifying that:
i. the representations and warranties of each
of the Vendors and Acquiree, as applicable,
contained in this Agreement are true and
correct on the date hereof (except to the
extent such representations and warranties
speak as of an earlier date) and are also
true and correct on and as of Closing;
ii. each Vendor and the Acquiree have performed
or complied in all material respects with
all agreements, conditions and covenants
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required by this Agreement to be performed
or complied with by each of them on or
before Closing;
iii. there has been no Material Adverse Effect on
the business of the Acquiree;
iv. all third party consents required to be
obtained for the consummation of the
Transactions, or the absence of which would
result in a Material Adverse Effect on the
Acquiree, have been obtained; and
v. all required governmental approvals have
been obtained and any applicable waiting
periods, have expired.
2.11.2.2 DELIVERIES IN FAVOUR OF THE VENDORS AND THE ACQUIREE
The obligation of the Vendors to sell the issued and
outstanding securities of the Acquiree shall be conditional
upon receipt of the following on Closing:
a) Share certificates evidencing in the aggregate 6,500,000
Acquiror Series I Exchangeable Shares registered in accordance
with instructions provided by the Vendors and as set out in
Schedule 2.3;
b) Share certificates evidencing 6,500,000 Adsero Series A
Preferred Shares in accordance with instructions provided by
the Vendors and as set out in Schedule 2.3 A;
c) Share certificates evidencing 1,932,000 Acquiror Preferred
Shares in accordance with instructions provided by the Vendors
and as set out in Schedule 2.3;
d) Cash payment in the aggregate amount of CDN$750,000 payable
by way of cheques apportioning payments in accordance with
instructions provided by the Vendors and as set out in
Schedule 2.3;
e) Xxxx Xxxxxxxx Employment Agreement in the form set out in
Schedule 2.11.2.2(e) hereto executed by TOL Canada and Adsero,
as applicable;
f) Xxxxx Xxxxxxxxx Employment Agreement in the form set out in
Schedule 2.11.2.2(f) hereto executed by TOL Canada and Adsero,
as applicable;
g) resolution of the Board of directors of Adsero confirming
the appointment of Xxxx Xxxxxxxx as President and Chief
Executive Officer of Adsero as at Closing;
h) resolution of the Board of directors of Adsero confirming
the appointment of Xxxxx Xxxxxxxxx as Vice-President of Adsero
for Sales and Marketing as at Closing;
i) confirmation of the reservation by Adsero of 11,330,000
Adsero Common Shares of its authorized common stock;
13
j) the execution of the Series I Exchangeable Shares Voting,
Exchange and Support Agreement attached hereto as Schedule
1.A;
k) the execution of the Series II Exchangeable Shares Voting,
Exchange and Support Agreement attached hereto as Schedule
1.B;
l) the execution of the Preferred Shares Purchase and Support
Agreement attached hereto as Schedule 1.C;
m) certificate of an Officer of Adsero confirming that, as at
Closing, the 6,500,000 Adsero Common Shares of Adsero to be
issued upon the exchange of the Acquiror Series I Exchangeable
Shares, represent no less than 20% of all of the issued and
outstanding common shares of Adsero;
n) the execution of the Lock-Up Agreement between Adsero,
Callco, YAC, the Acquiror and the Vendors holding Acquiror
Series I Exchangeable Shares, as at Closing, providing that
6,000,000 Adsero Common Shares to be issued upon exchange of
the Acquiror Series I Exchangeable Shares are subject to
restrictions for their sale, transfer or disposal;
o) the issuance of the Stock Options pursuant to Section 2.10.
p) Certificate executed by the Chief Executive Officer and
Chief Financial Officer of Adsero and the Chief Executive
Officer of Acquiror, YAC and Callco certifying that:
i. the representations and warranties of each
of Acquiror, YAC, Callco and Adsero
contained in this Agreement are true and
correct on the date hereof (except to the
extent such representations and warranties
speak as of an earlier date) and are also
true and correct on and as of Closing,
ii. Adsero, the Acquiror, YAC and Callco have
performed or complied in all material
respects with all agreements, conditions and
covenants required by this Agreement to be
performed or complied with by each of them
on or before Closing,
iii. there has been no Material Adverse Effect on
the business of the Acquiror, YAC, Callco or
Adsero,
iv. all third party consents required to be
obtained for the consummation of the
Transactions, or the absence of which would
result in a Material Adverse Effect on
Adsero, YAC, Callco or the Acquiror, have
been obtained, and
v. all required governmental approvals have
been obtained and any applicable waiting
periods, have expired save and except for
any matters relating to United States
Securities Laws.
q) Any further closing documents required to be tendered
pursuant to the terms hereof.
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On Closing or thereafter, the Parties shall duly execute, acknowledge and
deliver all such further assignments, conveyances, instruments and documents,
and shall take such other action consistent with the terms of this Agreement to
carry out the transactions contemplated by this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF ACQUIROR, YAC, CALLCO AND ADSERO
Acquiror, YAC, Callco and Adsero hereby solidarily represent and
warrant to the Vendors as follows, and confirm that Vendors are relying upon the
accuracy of each of such representations and warranties in connection with the
sale of the Acquiree Common Shares and Acquiree Preferred Shares and the
completion of the other transactions hereunder. The Vendors hereby recognize
that Adsero has no ongoing business activity nor any material assets and that
Acquiror, YAC and Callco are newly constituted entities formed solely for the
purposes of the transactions contemplated herein:
3.1 CORPORATE AUTHORITY AND BINDING OBLIGATION
Each of Acquiror, YAC, Callco, and Adsero is a corporation duly
organized, validly existing and in good standing under the Laws under which it
was incorporated. Each of them is qualified to do business as a foreign
corporation in all jurisdictions where it is required to be so qualified, except
where the failure to so qualify would not have a Material Adverse Effect. The
Charter Documents and by-laws of each of them have been duly adopted or ratified
and are current, correct and complete. Each of them have all necessary corporate
power and authority to own, lease and operate its Assets and to carry on its
Business as it is now being conducted.
3.2 AUTHORIZATION
Each of Acquiror, YAC, Callco, and Adsero has the requisite corporate
power and authority to execute and deliver the Transaction Documents to which it
is a party and to perform the Transactions to be performed by it. Such
execution, delivery and performance by each of them has been duly authorized by
all necessary corporate and shareholder action. Each Transaction Document
executed and delivered by them as of the date hereof has been duly executed and
delivered and constitutes a valid and binding obligation of them respectively,
as the case may be, enforceable against Acquiror, YAC, Callco, or Adsero, as the
case may be, in accordance with its terms.
3.3 VALIDITY OF CONTEMPLATED TRANSACTIONS
The securities issuances to be made hereunder by the Acquiror and to be
made by Adsero pursuant to this Agreement will be made in compliance with the
applicable Securities Laws. The form 8-K filing to be made by Adsero after the
Closing with respect to the Transactions will be made in compliance with the
applicable Securities Laws. Adsero shall use its best efforts to file with
securities regulatory authorities within 90 days from Closing, a registration
statement in connection with the Transactions herein contemplated. All required
consents to the Transactions by Acquiror's and Adsero's respective board of
directors have been obtained. With the
15
exception of the above, neither the execution and delivery by Acquiror, Callco,
YAC or Adsero, as the case may be, of the Transaction Documents to which they
are a party, nor the performance of the Transactions to be performed by it, will
require any filing, consent or approval under or constitute a Default that would
have a Material Adverse Effect on Adsero, Callco, YAC or Acquiror.
3.4 ADSERO SEC REPORTS; FINANCIAL STATEMENTS
Adsero has filed all required forms, reports, statements, schedules and
other documents with the SEC (collectively, the "Adsero SEC Reports"). Each of
such Adsero SEC Reports, at the time it was filed or was amended, complied in
all material respects with all applicable requirements of the applicable
Securities Laws.
3.5 CAPITALIZATION AND STOCK OWNERSHIP
3.5.1 The total authorized capital stock of Acquiror consists of i)
20 million shares of common stock, ii) 10 million shares of
Acquiror Series I Exchangeable Shares, iii) 10 million shares
of Acquiror Series II Exchangeable Shares and iv) 10 million
shares of Acquiror Preferred Shares. Of such authorized
capital stock and immediately prior to the date hereof
2,100,100 shares of Acquiror common stock were issued and
outstanding and no Acquiror Series I Exchangeable Shares,
Acquiror Series II Exchangeable Shares or Acquiror Preferred
Shares were issued and outstanding. At Closing, 2,100,100
shares of Acquiror common stock, 6,500,000 shares of Acquiror
Series I Exchangeable Shares and 1,932,000 Acquiror Preferred
Shares will be issued and outstanding. All of the currently
issued and outstanding shares of Acquiror's common stock are
validly issued, fully paid and non-assessable and all of the
shares of Acquiror Series I Exchangeable Shares and of
Acquiror Preferred Shares issued pursuant to this Agreement
will, when issued, have been validly issued, fully paid and
non-assessable. Other than as provided for in the Lock-Up
Agreement, no transfer or sale restrictions shall be
applicable, at the time of issuance. Other than as provided
for herein and the Transaction Documents, there are no
existing options, warrants, calls, commitments or other rights
of any character (including conversion or preemptive rights)
relating to the acquisition of any issued or unissued capital
stock or other securities of Acquiror.
3.5.2 Immediately prior to Closing, Adsero will own 100% of the
share capital of YAC, YAC will own 100% of the share capital
of Callco and Callco will own 100% of the share capital of the
Acquiror.
3.5.3 The total authorized capital stock of Adsero consists of
100,000,000 Adsero Common Shares and 20,000,000 Adsero
Preferred Shares. As at January 1st, 12,037,975 Adsero Common
Shares were issued and outstanding and there are no Adsero
Series A Preferred Shares issued and outstanding. Adsero has
duly reserved 6,500,000 Adsero Common Shares which shall be
issued upon the exchange of the Acquiror Series I Exchangeable
Shares and 4,830,000 Adsero Common Shares which shall be
issued upon exchange of Acquiror Series II Exchangeable
Shares. All of the currently issued and outstanding shares of
Adsero Common Shares are validly issued, fully paid and
non-assessable. Except
16
as set forth in Schedule 3.5.3 hereof, there are no existing
options, warrants, calls, commitments or other rights of any
character (including conversion or preemptive rights) relating
to the acquisition of any issued or unissued capital stock or
other securities of Adsero.
3.6 ADSERO FINANCIAL STATEMENTS
As at Closing, the Adsero SEC Reports contain the most recent unaudited
quarterly financial statements and audited year end financial statements in
accordance with the latest reporting period requirements (singularly and
collectively, the "Adsero Financial Statements"), a copy of which is annexed
hereto as Schedule 3.6. The Adsero Financial Statements fairly present the
financial position of Adsero as at the respective dates thereof and the results
of operations of Adsero for the periods indicated therein in accordance with
U.S. GAAP applied on a consistent basis throughout the periods involved. Adsero
has no material contingent liabilities except as otherwise set forth in the
Adsero Financial Statements.
3.7 TAXES
Adsero declares that it is late in the filing of its Tax Returns for
the years 2002 and 2003. However, Adsero represents and warrants that there were
no taxes payable for those years.
3.8 TITLE TO ASSETS AND RELATED MATTERS
Acquiror, Callco, YAC and Adsero have good and marketable title to
their respective Assets if any, free from any Encumbrances. Acquiror, Callco,
YAC and Adsero own all of the Assets necessary or currently used in the
operation of their respective Businesses if any.
3.9 REAL PROPERTY
As of the date hereof, Acquiror, YAC, Callco and Adsero do not own any
real property.
3.10 LEGAL PROCEEDINGS; COMPLIANCE WITH LAWS; GOVERNMENTAL PERMITS
3.10.1 Except as disclosed in the Adsero SEC Reports, there is no
Litigation or Proceedings against Adsero. To Acquiror's,
Callco's, YAC's and Adsero's respective Knowledge, Acquiror,
Callco, YAC and Adsero are and have been in compliance with
all applicable Laws, including U.S. Environmental Laws or
Environmental Laws, as the case may be, and applicable
Securities Laws, except where the failure to be in compliance
would not have a Material Adverse Effect. There has been no
Default under any Laws applicable to Acquiror, Callco, YAC or
Adsero, including Environmental Laws and U.S. Environmental
Laws, as the case may be. There has been no Default with
respect to any Court Order applicable to Acquiror or Adsero.
Neither Acquiror nor Adsero has received any written notice
and, to the Knowledge of Acquiror and Adsero, no other
communication has been received to the effect that they are
not in compliance with any applicable Laws.
17
3.10.2 There is no Environmental Condition at any property presently
or formerly owned or leased by Acquiror or Adsero or any of
their Subsidiaries which is reasonably likely to have a
Material Adverse Effect.
3.10.3 Acquiror, YAC, Callco and Adsero have all material consents,
permits, franchises, licenses, concessions, registrations,
certificates of occupancy, approvals and other authorizations
of Governmental Authorities (collectively, the "Governmental
Permits") required in connection with the present operation of
their respective Businesses, all of which are in full force
and effect. Acquiror, YAC, Callco and Adsero have complied
with all of their Governmental Permits.
3.11 CONTRACTS AND COMMITMENTS
Each Contract to which Acquiror, YAC, Callco or Adsero is a party is
legal, valid, binding and enforceable by Acquiror, YAC, Callco or Adsero, as the
case may be, except as otherwise limited by bankruptcy, insolvency,
reorganization and other laws affecting creditors' rights generally, and except
that the remedy of specific performance or other equitable relief is available
only at the discretion of the court before which enforcement is sought.
Acquiror, YAC, Callco and Adsero are not subject to any Contract limiting the
freedom of Acquiror, YAC, Callco or Adsero to compete in any line of business,
or with any Person, or in any geographic area or market.
3.12 EMPLOYEE RELATIONS
Neither Acquiror, YAC, Callco, nor Adsero have any employees.
3.13 BENEFIT PLANS
Acquiror, YAC, Callco, and Adsero have not sponsored or maintained any
benefit plans since their respective inceptions other than the Stock Option Plan
referred to in Section 2.10.
3.14 INTELLECTUAL PROPERTY
Acquiror, YAC, Callco, and Adsero do not infringe upon or unlawfully or
wrongfully use any Intellectual Property owned or claimed by another Person.
Acquiror, YAC, Callco, and Adsero do not presently utilize any Intellectual
Property.
3.15 ABSENCE OF CERTAIN CHANGES
Since September 30, 2004, the date of the latest Adsero balance sheet
contained in an Adsero SEC Report and except as disclosed in the Adsero SEC
Reports, Adsero has conducted its business in the ordinary course, and, as of
the date hereof, except as otherwise provided in this Agreement, there has not
been, nor as of the Effective Date, will there have been:
(a) any Material Adverse Effect on Adsero's Business;
(b) any distribution or payment declared or made in respect of
Adsero's capital stock by way of dividends, purchase or
redemption of shares or otherwise;
18
(c) any increase in the compensation payable or to become payable
to any current director or officer of Adsero, nor any material
change in any existing employment, severance, consulting
arrangements or any Adsero benefit plan;
(d) other than in the ordinary course of business, any waiver or
release of any material claim or right or cancellation of any
material debt held by Adsero;
(e) any change in practice with respect to Taxes, or any election,
change of any election, or revocation of any election with
respect to Taxes, or any settlement or compromise of any
dispute involving a Tax Liability;
(f) i) any creation, or assumption of, any leases, long-term debt
or any short-term debt for borrowed money other than under
existing notes payable, lines of credit or other credit
facility or in the ordinary course of business ii) any
assumption, granting of guarantees, endorsements or otherwise
becoming liable or responsible (whether directly, contingently
or otherwise) for the obligations of any other Person; iii)
any loans, advances or capital contributions to, or
investments in, any other Person; or iv) any other material
increase in Liabilities or capital expenditures outside the
ordinary course of business save and except for the loan
agreement and related collateral agreements entered into with
Barrington Bank.
(g) except with regard to grants of registration rights, any
material agreement, commitment or contract, except agreements,
commitments or contracts for the purchase, sale or lease of
goods or services in the ordinary course of business;
(h) except as set forth in Schedule 3.15(h), any authorization,
recommendation, proposal or announcement of an intention to
authorize, recommend or propose, or enter into any Contract
with respect to, any i) plan of liquidation or dissolution,
ii) acquisition of a material amount of Assets or securities,
save and except for the loan agreement and related collateral
agreements entered into with Barrington Bank, iii) disposition
or Encumbrance of a material amount of Assets or securities,
iv) merger or consolidation or v) material change in its
capitalization;
(i) any change in accounting procedure or practice; or
(j) any agreement or promise by Adsero to i) do any of the
foregoing or ii) do anything that would likely result in any
of the foregoing.
3.16 CORPORATE RECORDS
The corporate records of Acquiror, Callco, YAC and Adsero contain
accurate and current copies of all Charter Documents and of all minutes of
meetings, resolutions and other proceedings of their respective Board of
Directors and stockholders.
3.17 FINDER'S FEES
Except as otherwise disclosed in Schedule 3.17 and particularly in the
Manchester agreement, no Person is or will be entitled to any commission,
finder's fee or other payment in connection with the Transactions based on
arrangements made by or on behalf of Acquiror, Callco, YAC or Adsero.
19
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF ACQUIREE, TOL CANADA AND OF
VENDORS
Acquiree, TOL Canada and each of the Vendors hereby solidarily
represent and warrant to Acquiror, Callco, YAC and Adsero as follows, and
confirm that Acquiror, YAC, Callco and Adsero are relying upon the accuracy of
each of such representations and warranties in connection with the purchase of
the Acquiree Common Shares and Acquiree Preferred Shares and the completion of
the other transactions hereunder:
4.1 CORPORATE AUTHORITY AND BINDING OBLIGATION
Acquiree, TOL Canada, Xxxxxxxx Holdco and Lachambre Holdco are
corporations duly organized, validly existing and in good standing under the
Laws under which they were incorporated. Acquiree, TOL Canada, Xxxxxxxx Holdco
and Lachambre Holdco are qualified to do business as a foreign corporation in
any jurisdiction where they are required to be so qualified, except where the
failure to so qualify would not have a Material Adverse Effect. The Charter
Documents and bylaws of Acquiree and TOL Canada (all of which have been
delivered or made available to Acquiror) have been duly adopted and are current,
correct and complete. Acquiree, TOL Canada and each of the Vendors have all
necessary corporate power and authority to own, lease and operate their Assets
and to carry on their Business as they are now being conducted. Acquiree has no
Subsidiaries other than TOL Canada.
4.2 AUTHORIZATION
Each of Acquiree, TOL Canada and each of Xxxxxxxx Holdco and Lachambre
Holdco has the requisite corporate power and authority to execute and deliver
the Transaction Documents to which it is a party and to perform the Transactions
to be performed by it. Such execution, delivery and performance by each of
Acquiree and TOL Canada has been duly authorized by all necessary corporate and
Vendors action. Each of the Vendors has the capacity to execute and deliver the
Transaction Documents to which each of them is a party and to perform the
Transactions to be performed by them. Each Transaction Document executed and
delivered by Acquiree and any Vendor as of the date hereof have been duly
executed and delivered by Acquiree and each such Vendor and constitutes a valid
and binding obligation of Acquiree and each such Vendor, enforceable against
Acquiree and each such Vendor in accordance with its terms.
4.3 VALIDITY OF CONTEMPLATED TRANSACTIONS
Neither the execution and delivery by Acquiree, TOL Canada or any
Vendor of the respective Transaction Documents to which it, he or she is or will
be a party, nor the performance of the Transactions to be performed by it, him
or her, will require any filing, consent or approval which has not already been
obtained or constitute a Default that would have a Material Adverse Effect on
any of the Vendors, Acquiree or TOL Canada , or result in a loss of material
benefit under, (a) to any Vendor's Knowledge, any Law or Court Order to which
Acquiree or any Vendor is subject, (b) the Charter Documents or bylaws of
Acquiree, (c) any
20
other Contracts to which Acquiree or any Vendor is a party or by which any of
the Acquiree Assets may be subject.
4.4 CAPITALIZATION AND STOCK OWNERSHIP
4.4.1 As at the date hereof, the only issued and outstanding shares
in the share capital of the Acquiree are those described in
Schedule 4.4.1 attached hereto. There are no existing options,
warrants, calls, commitments or other rights of any character
(including conversion or preemptive rights) relating to the
acquisition, sale or transfer of any issued or unissued
capital stock or rights thereto or other securities of
Acquiree. All of the issued and outstanding shares in the
share capital of Acquiree and TOL Canada are validly issued,
fully paid and non-assessable;
4.4.2 On the date hereof, the only issued and outstanding shares in
the share capital of TOL Canada are the shares which are
beneficially owned by the Acquiree.
4.5 ANNUAL AUDITED FINANCIAL STATEMENTS OF TOLG
The annual audited consolidated financial statements of TOLG as at May
1, 2004 and for the period from May 1, 1999 to May 1, 2004 (the "TOLG Financial
Statements"), delivered to Adsero and Acquiror fairly present the financial
position of TOLG as at the respective dates thereof and the results of
operations of TOLG for the periods indicated in accordance with Canadian GAAP.
For purposes of this Agreement, the balance sheet of TOLG as of May 1, 2004 is
referred to as the "TOLG Balance Sheet" and the date thereof is referred to as
the "TOLG Balance Sheet Date." TOLG has no material contingent Liabilities
except as otherwise set forth in the TOLG Financial Statements and the unaudited
consolidated financial statements of TOLG for the period ended September 30,
2004.
4.6 TAXES
TOLG, Acquiree and TOL Canada have filed (or, in the case of Tax
Returns not yet due, will file) with the appropriate governmental agencies all
Tax Returns required to be filed on or before Closing and all such Tax Returns
filed were true, correct and complete in all respects, and (ii) have paid (or,
in the case of Taxes not yet due, will pay), all Taxes shown on such Tax
Returns. TOLG, Acquiree and TOL Canada have (i) duly paid or caused to be paid
all Taxes and all Taxes shown on Tax Returns that are or were due, and (ii)
provided a sufficient reserve on their respective balance sheets for the payment
of all Taxes not yet due and payable. No deficiency in respect of any Taxes
which has been assessed against TOLG, Acquiree or TOL Canada remains unpaid, and
Acquiree and TOL Canada have no Knowledge of any unassessed Tax deficiencies or
of any audits or investigations pending or threatened against TOLG, Acquiree or
TOL Canada with respect to any Taxes. TOLG, Acquiree and TOL Canada have not
extended or waived the application of any applicable statute of limitations of
any jurisdiction regarding the assessment or collection of any Tax or any Tax
Return. There are no liens for Taxes upon any assets of TOLG, Acquiree or TOL
Canada except for liens for current Taxes not yet due. There are no agreements,
waivers or other arrangements providing for any extension of time with respect
to the filing of any tax return or other document or the payment of any
governmental charges by TOLG, Acquiree or TOL Canada or the period for any
assessment or reassessment of governmental charges.
4.7 TITLE TO ASSETS AND RELATED MATTERS
21
Except as disclosed in Schedule 4.8.2, Acquiree and TOL Canada each
have good and marketable title to their respective Assets, free from any
Encumbrances. Each of Acquiree and TOL Canada owns all of their respective
Assets necessary or currently used in the operation of their respective
Businesses.
4.8 IMMOVEABLE PROPERTY
4.8.1 Except as set forth in Schedule 4.8, as of the date hereof,
Acquiree does not own any immoveable property. TOL Canada does
not own any immoveable property. Schedule 4.8 attached hereto
lists all the immoveable property of the Acquiree and sets
forth the legal descriptions thereof. There are no agreements,
options, contracts or commitments to sell, transfer or
otherwise dispose of the Immoveable Property or which would
restrict the ability of the Acquiree to transfer the
Immoveable Property.
4.8.2 The Acquiree has good and marketable title to the Immoveable
Property, free and clear of any and all Encumbrances, except
for:
i) the Encumbrances described in Schedule 4.8.2 attached
hereto;
ii) liens for current taxes not yet due, and
iii) rights of usage, rights of usufruct, zoning
restrictions, servitudes, and other restrictions that
run with the land and minor title defects (if any)
which do not, in the aggregate, materially adversely
affect the validity of title to or the value or
marketability of the Immoveable Property or
materially adversely affect the use of the Immoveable
Property as such property is presently used by the
Acquiree in connection with the Business.
4.8.3 The Immoveable Property described in Schedule 4.8 and all
buildings and structures located thereon and the conduct of
the Business as presently conducted do not violate, and the
use thereof in the manner in which presently used is not
adversely affected by, any zoning or building laws,
ordinances, regulations, covenants or official plans and is
not and has not been in violation of any Environmental Law.
Neither the Acquiree, TOL Canada nor any of the Vendors has
received any notification alleging any such violation. Such
buildings and structures do not encroach upon any lands not
owned by the Acquiree or TOL Canada. There are no
expropriation, condemnation or similar proceedings pending or,
to the best of the Knowledge of the Acquiree and the Vendors,
threatened, with respect to any of the Immoveable Property or
any part thereof.
4.9 LEGAL PROCEEDINGS; COMPLIANCE WITH LAW; GOVERNMENTAL PERMITS
4.9.1 There is no Litigation or Proceedings, to Acquiree's, TOL
Canada's, or any Vendor's Knowledge, against any of them. To
Acquiree's, TOL Canada's, or any Vendor's Knowledge, each of
Acquiree and TOL Canada is and has been in compliance with all
applicable Laws, including applicable Securities Laws and
Environmental Laws, except where the failure to be in
compliance would not have a Material Adverse Effect. There has
been no Default under any Laws applicable to Acquiree, TOL
Canada or any of the Vendors. There has been no Default with
22
respect to any Court Order applicable to Acquiree, TOL Canada
or any of the Vendors. Neither Acquiree, TOL Canada nor any of
the Vendors have received any written notice and, to the
Knowledge of Acquiree or any Vendor, no other communication
has been received to the effect that it is not in compliance
with any applicable Laws. None of the Vendors has reason to
believe that any presently existing circumstances are likely
to result in violations of any applicable Laws.
4.9.2 There is no Environmental Condition at any property presently
or formerly owned or leased by Acquiree or TOL Canada which is
reasonably likely to have a Material Adverse Effect.
4.9.3 Acquiree and TOL Canada have all material consents, permits,
franchises, licenses, concessions, registrations, certificates
of occupancy, approvals and other authorizations of
Governmental Authorities (collectively, the "Governmental
Permits") required in connection with the operation of their
Businesses, all of which are in full force and effect.
Acquiree and TOL Canada have complied with all of their
Governmental Permits.
4.9.4 Acquiree and TOL Canada, the operation of their respective
Businesses, each of their property and Assets owned or used by
each of them and the use, maintenance and operation thereof
have been and are in compliance with all Environmental Laws.
Each of them has complied with all reporting and monitoring
requirements under all Environmental Laws. None of them has
received any notice of any non-compliance with any
Environmental Laws and none of them has ever been convicted of
an offence for non-compliance with any Environmental Laws or
been fined or otherwise sentenced or settled such prosecution
short of conviction.
4.9.5 The Acquiree and TOL Canada have obtained all Environmental
Permits necessary to conduct their respective Businesses and
to own, use and operate their respective properties and
Assets. All such Environmental Permits are listed in Schedule
4.9.5 and complete and correct copies thereof have been
provided to the Acquiror.
4.9.6 Except as disclosed in Schedule 4.9.6, there are no Hazardous
Substances located in or on any of the properties or Assets
owned or used by the Acquiree or TOL Canada, and no release of
any Hazardous Substances has occurred on or from their
properties and Assets or has resulted from the operation of
their respective Businesses and the conduct of all of their
other activities. Except as disclosed in Schedule 4.9.6, the
Acquiree and TOL Canada have not used any of their respective
properties or Assets to produce, generate, store, handle,
transport or dispose of any Hazardous Substances and none of
the Immoveable Properties and none of the Leased Premises has
been or is being used as a landfill or waste disposal site.
4.9.7 Without limiting the generality of the foregoing, except as
disclosed in Schedule 4.9.6, there are no underground or
surface storage tanks or urea formaldehyde foam insulation,
asbestos, polychlorinated biphenyls (PCBs) or radioactive
substances located on or in any of the properties or Assets
owned or used by the Acquiree or TOL Canada. The Acquiree and
TOL Canada are not, and there is no basis upon which either of
them could become, responsible for any clean-up or corrective
action under any Environmental Laws. Except as disclosed in
Schedule 4.9.5, the Acquiree
23
and TOL Canada have never conducted or caused to be conducted
an environmental audit, assessment or study of any of their
Assets.
4.9.8 To their knowledge and without further investigation there are
no pending or proposed changes to Environmental Laws which
would render illegal or restrict the manufacture or sale of
any products manufactured or sold or services provided by the
Acquiree or TOL Canada.
4.10 CONTRACTS AND COMMITMENTS
4.10.1 Each Contract to which Acquiree and TOL Canada are a party (i)
is legal, valid, binding and enforceable by each of them as
the case may be, except as otherwise limited by bankruptcy,
insolvency, reorganization and other laws affecting creditors'
rights generally, and except that the remedy of specific
performance or other equitable relief is available only at the
discretion of the court before which enforcement is sought,
and (ii) Acquiree and TOL Canada and to Acquiree's and any
Vendor's Knowledge, are not in Default under any such Contract
where such Default would have a Material Adverse Effect.
Acquiree and TOL Canada are not subject to any Contract
limiting the freedom of any of them to compete in any line of
business, or with any Person, or in any geographic area or
market.
4.10.2 Except as disclosed in Schedule 4.10.2, the Acquiree and TOL
Canada are not committed to make any capital expenditures, nor
have any capital expenditures been authorized by any of them
at any time since May 1, 2004, except for capital expenditures
made in the ordinary course of the business.
4.11 EMPLOYEES
Schedule 4.11 attached hereto sets forth the name, job title, duration
of employment, vacation entitlement, employee benefit entitlement and rate of
remuneration (including bonus and commission entitlement) of each employee of
the Acquiree and TOL Canada. Schedule 4.11 also sets forth the names of all
employees of the Acquiree and TOL Canada who are now on disability, maternity or
other authorized leave or who are receiving workers' compensation or short-term
or long-term disability benefits.
4.12 EMPLOYMENT AGREEMENTS
Neither the Acquiree nor TOL Canada is a party to any written or oral
employment, service or consulting agreement relating to any one or more persons,
except for oral employment agreements which are of indefinite term and without
any special arrangements or commitments with respect to the continuation of
employment or payment of any particular amount upon termination of employment.
The Acquiree and TOL Canada do not have any employees who cannot be dismissed
upon such period of notice as is required by law in respect of a contract of
employment for an indefinite term.
4.13 EMPLOYEE RELATIONS
4.13.1 TOL Canada will be subject to a collective agreement with a
labour union representing certain of its employees, the whole
as set forth in Schedule 4.13.1 attached hereto.
24
4.13.2 There are no existing or, to the Knowledge of the Acquiree,
TOL Canada and the Vendors, threatened, labour strikes or
labour disputes or grievances affecting the Acquiree or TOL
Canada.
4.13.3 Each of the Acquiree and TOL Canada has complied with all
laws, rules, regulations and orders applicable to it relating
to employment, including those relating to wages, hours,
collective bargaining, occupational health and safety,
workers' hazardous materials, employment standards, pay equity
and workers' compensation. There are no outstanding charges or
complaints against the Acquiree or TOL Canada relating to
unfair labour practices or discrimination or under any
legislation relating to employees. Each of the Acquiree and
TOL Canada has paid in full all amounts owing under the ACT
RESPECTING INDUSTRIAL ACCIDENTS AND OCCUPATIONAL DISEASES,
R.S.Q., c. A-3.001 (Quebec), and the workers' compensation
claims experience of the Acquiree or TOL Canada would not
permit a penalty reassessment under such legislation.
4.14 BENEFITS PLANS
4.14.1 Except as set forth in Schedule 4.14 attached hereto in
connection with a profit sharing plan (the "PROFIT SHARING
PLAN"), the Acquiree and TOL Canada do not have, and are not
subject to any present or future obligation or liability
under, any pension plan, deferred compensation plan,
retirement income plan, stock option or stock purchase plan,
bonus plan or policy, employee group insurance plan,
hospitalization plan, disability plan or other employee
benefit plan, program, policy or practice, formal or informal,
with respect to any of its employees, other than its
liabilities under the ACT RESPECTING THE QUEBEC PENSION PLAN,
R.S.Q, c. R-9 and health plans established pursuant to statute
in other jurisdictions. Schedule 4.14 also lists the general
policies, procedures and work-related rules in effect with
respect to employees of the Acquiree and TOL Canada, whether
written or oral, including but not limited to policies
regarding holidays, sick leave, vacation, disability and death
benefits, termination and severance pay, automobile allowances
and rights to company-provided automobiles and expense
reimbursements. Complete and correct copies of all
documentation establishing or relating to the Profit Sharing
Plan listed in Schedule 4.14 and the most recent financial
statements and actuarial reports related thereto and all
reports and returns in respect thereof filed with any
regulatory agency within three years prior to the date hereof
have been provided to the Acquiror.
4.14.2 There are no pending claims by any employee covered under the
Profit Sharing Plan or by any other person which allege a
breach of fiduciary duties or violation of governing law or
which may result in liability to the Acquiree and TOL Canada
and, to the best of the knowledge of the Acquiree and the
Vendors, there is no basis for such a claim.
4.14.3 There is no compensation, remuneration, or payment of any
nature whatsoever payable to any director, officer, other
senior executive or person of the Acquiree or TOL Canada as a
direct or indirect result of the Transactions herein
contemplated.
4.15 INTELLECTUAL PROPERTY
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4.15.1 Schedule 4.15.1 attached hereto lists and contains a
description of:
(i) all patents, patent applications and registrations,
trade marks, trade xxxx applications and
registrations, copyrights, copyright applications and
registrations, trade names and industrial designs,
domestic or foreign, owned or used by the Acquiree
and TOL Canada or relating to the operation of their
respective Businesses;
(ii) all trade secrets, know-how, inventions and other
intellectual property owned or used by the Acquiree
and TOL Canada or relating to their respective
Businesses, and
(iii) all computer systems and application software,
including without limitation all documentation
relating thereto and the latest revisions of all
related object and source codes therefor, owned or
used by the Acquiree and TOL Canada or relating to
their respective Businesses.
4.15.2 The Acquiree and TOL Canada have good and valid title to all
of the Intellectual Property, free and clear of any and all
Encumbrances, except in the case of any Intellectual Property
licensed to the Acquiree and TOL Canada as disclosed in
Schedule 4.15.2. Complete and correct copies of all agreements
whereby any rights in any of the Intellectual Property have
been granted or licensed to the Acquiree or TOL Canada have
been provided to the Acquiror. No royalty or other fee is
required to be paid by the Acquiree or TOL Canada to any other
person in respect of the use of any of the Intellectual
Property except as provided in such agreements delivered to
the Acquiror. The Acquiree and TOL Canada, as the case may be,
have protected their rights in the Intellectual Property in
the manner and to the extent described in Schedule 4.15.2.
Except as indicated in Schedule 4.15.2, the Acquiree and TOL
Canada, as the case may be, have the exclusive right to use
all of the Intellectual Property and have not granted any
licence or other rights to any other person in respect of the
Intellectual Property. Complete and correct copies of all
agreements whereby any rights in any of the Intellectual
Property have been granted or licensed by the Acquiree and TOL
Canada to any other person have been provided to the Acquiror.
4.15.3 Except as disclosed in Schedule 4.15.2, there are no
restrictions on the ability of the Acquiree or TOL Canada or
any successor to or assignee from the Acquiree and TOL Canada
to use and exploit all rights in the Intellectual Property
given the nature of the Transactions herein contemplated. All
statements contained in all applications for registration of
the Intellectual Property were true and correct as of the date
of such applications. Each of the trade marks and trade names
included in the Intellectual Property is in use. None of the
rights of the Acquiree and TOL Canada, as the case may be, in
the Intellectual Property will be impaired or affected in any
way by the transactions contemplated by this Agreement.
4.15.4 The conduct of the Business and the use of the Intellectual
Property does not infringe, and the Acquiree and TOL Canada,
as the case may be, have not received any notice, complaint,
threat or claim alleging infringement of, any patent, trade
xxxx, trade name, copyright, industrial design, trade secret
or other Intellectual Property or propriety right of any other
person, and the conduct of the Business does not include any
activity which may constitute passing off.
26
4.15.5 The computer systems, including hardware and software, are
free from viruses and other defects which would have a
Material Adverse Effect on the Business or Assets of the
Acquiree and TOL Canada. The Acquiree and TOL Canada have
taken, and will continue to take, all steps and implement all
procedures necessary to ensure, so far as reasonably possible,
that such systems are free from viruses and will remain so.
4.16 ABSENCE OF CERTAIN CHANGES
Since May 1, 2004, the Acquiree and TOL Canada have conducted their
respective Businesses in the ordinary course, and, as of the date hereof, there
has not been:
(a) any Material Adverse Effect on their respective
Businesses;
(b) any distribution or payment declared or made in
respect of Acquiree's or TOL Canada capital stock by
way of dividends, purchase or redemption of shares or
otherwise, except with respect to any distribution,
payment of dividend, the purchase, issuance or
redemption of shares relating to the reorganization
of TOLG and TOL Canada for the purpose of the
Transactions contemplated herein and which have been
disclosed in writing to Adsero, YAC, Callco and
Acquiror;
(c) any increase in the compensation payable or to become
payable to any current director or officer of
Acquiree or TOL Canada nor any material change in any
existing employment, severance, consulting
arrangements or in the Acquiree or TOL Canada Profit
Sharing Plan;
(d) save and except for the loan agreement and related
collateral agreements entered into with Barrington
Bank, any sale, assignment or transfer of any Assets,
or any additions to or transactions involving any
Assets, other than those made in the ordinary course
of business;
(e) other than in the ordinary course of business, any
waiver or release of any material claim or right or
cancellation of any material debt held by Acquiree or
TOL Canada;
(f) any change in practice with respect to Taxes, or any
election, change of any election, or revocation of
any election with respect to Taxes, or any settlement
or compromise of any dispute involving a Tax
Liability;
(g) save and except for the loan agreement and related
collateral agreements entered into with Barrington
Bank, i) any creation, or assumption of, any leases,
long-term debt or any short-term debt for borrowed
money other than under existing notes payable, lines
of credit or other credit facility or in the ordinary
course of business ii) any assumption, granting of
guarantees, endorsements or otherwise becoming liable
or responsible (whether directly, contingently or
otherwise) for the obligations of any other Person or
iii) any loans, advances or capital contributions to,
or investments in, any other Person; or iv) any other
material increase in Liabilities or capital
expenditures outside the ordinary course of business.
27
(h) save and except for the loan agreement and related
collateral agreements entered into with Barrington
Bank, any material agreement, commitment or contract,
except agreements, commitments or contracts for the
purchase, sale or lease of goods or services in the
ordinary course of business;
(i) save and except for the loan agreement and related
collateral agreements entered into with Barrington
Bank, any authorization, recommendation, proposal or
announcement of an intention to authorize, recommend
or propose, or enter into any Contract with respect
to, any i) plan of liquidation or dissolution, ii)
acquisition of a material amount of assets or
securities, iii) disposition or Encumbrance of a
material amount of assets or securities, iv) merger
or consolidation or v) material change in its
capitalization;
(j) any change in accounting procedure or practice; or
(k) any agreement or promise by Acquiree or TOL Canada to
i) do any of the foregoing or ii) do anything that
would likely result in any of the foregoing.
4.17 CORPORATE RECORDS
In all material respects, the minute books of Acquiree and TOL Canada
contain accurate, complete and current copies of all Charter Documents and of
all minutes of meetings, resolutions and other proceedings of their respective
Board of Directors and stockholders.
4.18 OWNERSHIP OF SHARES
Each Vendor is the registered and sole owner of the Acquiree Common
Shares and of the Acquiree Preferred Shares as set forth next to such Vendor's
name on Schedule 2.1, and has sole management power over the disposition of such
Acquiree Common Shares and Acquiree Preferred Shares. The Acquiree Common Shares
and Acquiree Preferred Shares owned by each Vendor are free and clear of any
liens, hypothecs, claims, Encumbrances, and charges. The Acquiree Common Shares
and Acquiree Preferred Shares have not been sold, conveyed, encumbered,
hypothecated or otherwise transferred by any Vendor. Each Vendor has the legal
right to enter into and to consummate the Transactions contemplated hereby and
otherwise to carry out his or her obligations hereunder.
4.19 AGREEMENTS, OPTIONS, UNDERSTANDINGS
No Person has any agreement, option, understanding or commitment or any
right or privilege capable of becoming an agreement, option or commitment
relating to the transfer of any shares of the capital stock of Acquiree or TOL
Canada, except as provided herein.
4.20 NO UNDISCLOSED OR CONTINGENT LIABILITIES
Except as set forth in the TOLG Financial Statements, there are no
material financial obligations or liabilities, including contingent liabilities
or product related liabilities.
28
4.21 SHAREHOLDERS' AGREEMENTS
There are no shareholders' agreements, pooling agreements, voting
trusts or other similar agreements with respect to the ownership or voting of
any of the shares of the Acquiree or TOL Canada.
4.22 TRANSFER OF PURCHASED SHARES
The Acquiree and the Vendors have taken all necessary steps and
corporate proceedings to be taken in order to permit the Acquiree Common Shares
and Acquiree Preferred Shares to be duly and regularly transferred to the
Acquiror.
4.23 LEASED PREMISES
Schedule 4.23 attached hereto describes all leases or agreements to
lease under which the Acquiree and/or TOL Canada lease any immoveable property.
Complete and correct copies of the Leases have been provided to the Acquiror.
The Acquiree and/or TOL Canada are exclusively entitled to all rights and
benefits as lessee under the Leases and none of them has sublet, assigned,
licensed or otherwise conveyed any rights in the Leased Premises or in the
Leases to any other Person. The names of the other parties to the Leases, the
description of the Leased Premises, the term, rent and other amounts payable
under the Leases and all renewal options available under the Leases are
accurately described in Schedule 4.23. All rentals and other payments and other
obligations required to be paid and performed by the Acquiree and/or TOL Canada,
as the case may be, pursuant to the Leases have been duly paid and performed.
The Acquiree and/or TOL Canada are not in default of any of their obligations
under the Leases and, to the Knowledge of the Acquiree and the Vendors, none of
the landlords or other parties to the Leases are in default of any of their
obligations under the Leases. The terms and conditions of the Leases will not be
affected by, nor result in a Default under any of the Leases as a result of, the
completion of the Transactions contemplated hereunder, all the required consents
having been obtained. The use by the Acquiree and/or TOL Canada, as the case may
be, of the Leased Premises is not in breach of any building, zoning or other
statute, by-law, ordinance, regulation, covenant, restriction or official plan
where such breach would have a Material Adverse Effect. The Acquiree and/or TOL
Canada have adequate rights of ingress to and egress from the Leased Premises
for the operation of their respective Business in the ordinary course.
4.24 INDEBTEDNESS
Except as disclosed in the TOLG Financial Statements, the Acquiree and
TOL Canada have no bonds, debentures, hypothecs, promissory notes or other
indebtedness maturing more than one year after the date of their original
creation or issuance, and is not under any obligation to create or issue any
bonds, debentures, hypothecs, promissory notes or other indebtedness maturing
more than one year after the date of their original creation or issuance save
and except for the loan agreement and related collateral agreements entered into
with Barrington Bank.
4.25 OTHER AGREEMENTS
No Person has any agreement, option, undertaking or commitment or any
right capable of becoming an agreement, option or commitment relating to the
transfer of any shares of the
29
Acquiree or TOL Canada or in connection with the change of control of the
Acquiree or TOL Canada other than as set forth in this Agreement.
30
ARTICLE V
JOINT COVENANTS OF THE PARTIES
5.1 PUBLIC ANNOUNCEMENT
Adsero, Acquiror and Acquiree shall collaborate in good faith to
prepare the press release which is to be filed as a result of the completion of
the Transactions, the substance of which shall be approved by all parties acting
reasonably.
5.2 COOPERATION
Upon the terms and subject to the conditions hereof, each of the
Parties shall use its commercially reasonable efforts to take or cause to be
taken all actions and to do or cause to be done all things necessary, proper or
advisable to consummate as promptly as practicable the Transactions and shall
use its commercially reasonable efforts to obtain all required consents, and to
effect all necessary filings under the Securities Act and the Exchange Act.
Without limiting the generality of the foregoing, each Party shall use all
commercially reasonable efforts to take, or cause to be taken, all other actions
and to do, or cause to be done, all other things necessary, proper or advisable
to fulfill the conditions herein to the extent that the fulfillment thereof is
within a Party's control.
5.3 EXPENSES
Adsero shall assume all of the legal, accounting and other expenses
incurred by Adsero, YAC, Callco and Acquiror in connection with the
Transactions. Acquiree, TOL Canada and the Vendors shall pay all of the legal,
accounting and other expenses incurred by Acquiree, TOL Canada and the Vendors
in connection with the Transactions.
5.4 ECONOMIC REVIEW
Acquiror, YAC, Callco, Adsero and Acquiree have completed their
respective due diligence including economic review of the financial statements
and financial condition of Adsero, TOLG and TOL Canada. In connection therewith,
each Party has supplied the other with all relevant information necessary to
enable such other Party to make an informed determination as to the financial
condition of Adsero, Acquiror, TOLG, TOL Canada and Acquiree, as the case may
be, and, subject to the representations and warranties, each Party hereby
declares itself satisfied of its economic review.
ARTICLE VI
COVENANTS OF ACQUIREE AND VENDORS
6.1 OPERATION OF THE BUSINESS
Except as contemplated by this Agreement or as expressly agreed to in
writing by Acquiror, during the period from the date of the Letter of Intent to
Closing, Acquiree and TOL Canada have conducted their operations only in the
ordinary course of business consistent with
31
sound financial, operational and regulatory practice, and have taken no action
which would have a Material Adverse Effect on their ability to consummate the
Transactions. Without limiting the generality of the foregoing, except as
otherwise expressly provided in this Agreement or related Schedules and as
otherwise disclosed to the Parties hereto, prior to Closing, Acquiree and TOL
Canada have not, and Vendors have not caused or permitted Acquiree to:
(a) amend their respective Charter Documents or bylaws (or similar
organizational documents);
(b) authorize for issuance, issue, sell, deliver, grant any
options for, or otherwise agree or commit to issue, sell or
deliver any shares of their respective capital stock or any
other securities;
(c) recapitalize, split, combine or reclassify any shares of its
capital stock; declare, set aside or pay any dividend or other
distribution (whether in cash, stock or property or any
combination thereof) in respect of their respective capital
stock; or purchase, redeem or otherwise acquire any of their
respective securities or modify any of the terms of any such
securities, except with respect to any distribution, payment
of dividend, the purchase, issuance or redemption of shares
relating to the reorganization of TOLG and TOL Canada for the
purpose of the Transactions contemplated herein and which have
been disclosed in writing to Adsero, YAC, Callco and Acquiror;
(d) i) save and except for the loan agreement and related
collateral agreements entered into with Barrington Bank,
create, incur, assume or permit to exist any long-term debt or
any short-term debt for borrowed money other than under
existing notes payable, lines of credit or other credit
facilities or in the ordinary course of business; ii) assume,
guarantee, endorse or otherwise become liable or responsible
(whether directly, contingently or otherwise) for the
obligations of any other or iii) make any loans, advances or
capital contributions to, or investments in, any other Person;
(e) i) increase in any manner the rate of compensation of any of
their respective directors, officers or other employees, ii)
pay or agree to pay any bonus, pension, retirement allowance,
severance or other employee benefit except as required under
currently existing Profit Sharing Plan, except for holiday
bonuses in an aggregate amount not to exceed holiday bonuses
for the prior year, or iii) amend, terminate or enter into any
employment, consulting, severance, change in control or
similar agreements or arrangements with any of their
respective directors, officers or other employees;
(f) save and except for the loan agreement and related collateral
agreements entered into with Barrington Bank, enter into any
material agreement, commitment or contract, except agreements,
commitments or contracts for the purchase, sale or lease of
goods or services in the ordinary course of business;
(g) save and except for the loan agreement and related collateral
agreements entered into with Barrington Bank, other than in
the ordinary course of business, authorize, recommend, propose
or announce an intention to authorize, recommend or propose,
or enter into any Contract with respect to, any i) plan of
liquidation or dissolution, ii) acquisition of a material
amount of assets or securities, iii) disposition or
32
Encumbrance of a material amount of assets or securities, iv)
merger or consolidation or v) material change in their
respective capitalization;
(h) change any material accounting or Tax procedure or practice;
(i) compromise, settle or otherwise modify any material claim or
litigation;
(j) permit any existing insurance policy insuring Acquiree's or
TOL Canada's Assets to terminate; or
(k) commit, promise or agree to do any of the foregoing.
6.2 MAINTENANCE OF THE ASSETS
Since May 1, 2004, TOLG and TOL Canada have used their respective
Assets consistent with past practice. Save and except for the loan agreement and
related collateral agreements entered into with Barrington Bank, TOLG and TOL
Canada have not directly or indirectly, sold or encumbered all or any part of
their Assets, other than sales in the ordinary course of business or initiated
or participated in any discussions or negotiations or entered into any agreement
to do any of the foregoing.
6.3 EMPLOYEES AND BUSINESS RELATIONS
Since May 1, 2004, TOLG and TOL Canada and since its incorporation,
Acquiree, have used commercially reasonable efforts to keep available the
services of their current employees and agents and to maintain their relations
and goodwill with their suppliers, customers, distributors and any others having
business relations with them.
6.4 WORKING CAPITAL AND DEBT
As at the Effective Date, TOL Canada, Acquiree and TOLG had combined
working capital of at least CDN $400,000, after excluding the current portion of
long term debt.
6.5 CONSENTS
Acquiree, TOLG and TOL Canada have obtained, from regulatory
authorities and third parties, all required consents and approvals to the
Transactions herein contemplated. The Transactions herein contemplated and the
resulting change of control of the Acquiree does not constitute a Default.
ARTICLE VII
INDEMNIFICATION
7.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES
All the provisions of this Agreement will survive the Closing
notwithstanding any investigation at any time made by or on behalf of any Party
hereto. The representations, warranties and covenants set forth in Articles III,
IV, VI and VIII, and in any certificate delivered in connection herewith with
respect to any of those representations, warranties and
33
covenants will terminate and expire on the date one (1) year after Closing
except in the event of fraud or intentional misrepresentation, in which case the
survival period shall not be limited. The expiration period with respect to tax
matters, shall be the period ending ninety (90) days after the date upon which
the right of any taxation authority to assess or reassess with respect to a
claim for such taxes expires. After a representation and warranty has terminated
and expired, no indemnification will or may be sought pursuant to this Article
VII on the basis of that representation and warranty by any Person who would
have been entitled pursuant to this Article VII to indemnification on the basis
of that representation and warranty prior to its termination and expiration,
provided that, in the case of each representation and warranty that will
terminate and expire as provided in this Section 7.1, no claim presented in
writing for indemnification pursuant to this Article VII on the basis of that
representation and warranty prior to its termination and expiration will be
affected in any way by that termination and expiration. The Parties agree that
no indemnification will be sought by any Party hereto under this Article VII
where the amount of indemnification sought would be less than $25,000.
7.2 INDEMNIFICATION OF VENDORS
Each of Acquiror, Adsero, YAC and Callco solidarily covenants and
agrees that it will indemnify each Vendor against, and hold each Vendor harmless
from and in respect of, all losses, costs, expenses and damage claims that arise
from, are based on, arise out of, or are attributable to (i) any breach of the
representations and warranties of each of Acquiror and Adsero or in certificates
delivered by each of Acquiror and Adsero in connection herewith; (ii) the
nonfulfillment of any covenant or agreement on the part of each of Acquiror and
Adsero under this Agreement to be performed prior to or immediately after the
Closing or (iii) any liability under the Securities Laws which arises out of or
is based on (A) any untrue statement or alleged untrue statement of a material
fact relating to each of Acquiror, YAC, Callco and Adsero which is provided to
Vendors in writing by each of Acquiror, YAC, Callco and Adsero or (B) any
omission or alleged omission to state therein a material fact relating to each
of Acquiror, YAC, Callco and Adsero required to be stated therein or necessary
to make the statements therein not misleading, and not provided to Vendors by
each of Acquiror, YAC, Callco and Adsero after a written request therefore.
7.3 INDEMNIFICATION OF ACQUIROR INDEMNIFIED PARTIES
Each Vendor solidarily covenants and agrees that he, she or it will
indemnify each Acquiror Indemnified Party against, and hold each Acquiror
Indemnified Party harmless from and in respect of, all losses, costs, expenses
and damage claims that arise from, are based on, arise out of, or are
attributable to (i) any breach of the representations and warranties of
Acquiree, TOL Canada or any Vendor or in certificates delivered by Acquiree, TOL
Canada or any Vendor in connection herewith; (ii) the nonfulfillment of any
covenant or agreement on the part of Acquiree, TOL Canada or any Vendor under
this Agreement to be performed prior to the Closing or (iii) any liability under
any applicable Law which arises out of or is based on (A) any untrue statement
of a material fact relating to Acquiree, TOL Canada or any Vendor, which is
provided to Acquiror or its counsel in writing by the Acquiree, TOL Canada or
any Vendor or (B) any omission to state a material fact relating to Acquiree,
TOL Canada or any Vendor, after a written request by Acquiror, Adsero or its
counsel.
7.4 CONDITIONS OF THIRD PARTY INDEMNIFICATION
34
(a) All claims for indemnification under this Agreement arising
from third-party claims shall be asserted and resolved as
follows in this Section 7.4.
(b) A Party claiming indemnification under this Agreement (an
"Indemnified Party") shall promptly (i) notify the party from
whom indemnification is sought (the "Indemnifying Party") of
any third-party claim or claims asserted against the
Indemnified Party ("Third Party Claim") that could give rise
to a right of indemnification under this Agreement and (ii)
transmit to the Indemnifying Party a written notice ("Claim
Notice") describing in reasonable detail the nature of the
Third Party Claim, a copy of all papers served with respect to
that claim (if any), an estimate of the amount of damages
attributable to the Third Party Claim to the extent feasible
(which estimate shall not be conclusive of the final amount of
such claim) and the basis for the Indemnified Party's request
for indemnification under this Agreement. Except as set forth
in Section 7.1, the failure to promptly deliver a Claim Notice
shall not relieve the Indemnifying Party of its obligations to
the Indemnified Party with respect to the related Third Party
Claim except to the extent that the resulting delay is
materially prejudicial to the defense of that claim. Within 15
days after receipt of any Claim Notice (the "Election
Period"), the Indemnifying Party shall notify the Indemnified
Party (i) whether the Indemnifying Party disputes its
potential liability to the Indemnified Party under this
Article VII with respect to that Third Party Claim and (ii) if
the Indemnifying Party does not dispute its potential
liability to the Indemnified Party with respect to that Third
Party Claim, whether the Indemnifying Party desires, at the
sole cost and expense of the Indemnifying Party, to defend the
Indemnified Party against that Third Party Claim.
(c) If the Indemnifying Party does not dispute its potential
liability to the Indemnified Party and notifies the
Indemnified Party within the Election Period that the
Indemnifying Party elects to assume the defense of the Third
Party Claim, then the Indemnifying Party shall have the right
to defend, at its sole cost and expense, that Third Party
Claim by all appropriate proceedings, which proceedings shall
be prosecuted diligently by the Indemnifying Party to a final
conclusion or settled at the discretion of the Indemnifying
Party in accordance with this Section 7.4(c) and the
Indemnified Party will furnish the Indemnifying Party with all
information in its possession, subject to a confidentiality
agreement, with respect to that Third Party Claim and
otherwise cooperate with the Indemnifying Party in the defense
of that Third Party Claim; provided, however, that the
Indemnifying Party shall not enter into any settlement with
respect to any Third Party Claim that (i) purports to limit
the activities of, or otherwise restrict in any way, any
Indemnified Party or any Affiliate of any Indemnified Party,
(ii) involves a guilty plea to any crime or (iii) involves a
fine or penalty, whether or not paid by the Indemnifying
Party, without the prior consent of that Indemnified Party
(which consent may be withheld in the sole discretion of that
Indemnified Party). The Indemnified Party is hereby
authorized, at the sole cost and expense of the Indemnifying
Party, to file, during the Election Period, any motion, answer
or other pleadings that the Indemnified Party shall deem
necessary or appropriate to protect its interests or those of
the Indemnifying Party. The Indemnified Party may participate
in, but not control, any defense or settlement of any Third
Party Claim controlled by the Indemnifying Party pursuant to
this Section 7.4(c) and will bear its own costs and expenses
with respect to that participation; provided,
35
however, that if the named parties to any such action
(including any impleaded parties) include both the
Indemnifying Party and the Indemnified Party, and the
Indemnified Party has been advised by counsel that there may
be one or more legal defenses available to it which are
different from or additional to those available to the
Indemnifying Party, then the Indemnified Party may employ
separate counsel at the expense of the Indemnifying Party
(provided that such expenses are reasonable), and, on its
written notification of that employment, the Indemnifying
Party shall not have the right to assume or continue the
defense of such action on behalf of the Indemnified Party. If
the Indemnifying Party (i) within the Election Period (A)
disputes its potential liability to the Indemnified Party
under this Article VII, (B) elects not to defend the
Indemnified Party pursuant to Section 7.4(c) or (C) fails to
notify the Indemnified Party that the Indemnifying Party
elects to defend the Indemnified Party pursuant to Section
7.4(c) or (ii) elects to defend the Indemnified Party pursuant
to Section 7.4(c) but fails diligently and promptly to
prosecute or settle the Third Party Claim, then the
Indemnified Party shall have the right to defend, at the sole
cost and expense of the Indemnifying Party (provided that such
expenses are reasonable) (if the Indemnified Party is entitled
to indemnification hereunder), the Third Party Claim by all
appropriate proceedings, which proceedings shall be promptly
and vigorously prosecuted by the Indemnified Party to a final
conclusion or settled. The Indemnified Party shall have full
control of such defense and proceedings. Notwithstanding the
foregoing, if the Indemnifying Party has delivered a written
notice to the Indemnified Party to the effect that the
Indemnifying Party disputes its potential liability to the
Indemnified Party under this Article VII and if such dispute
is resolved in favor of the Indemnifying Party, the
Indemnifying Party shall not be required to bear the costs and
expenses of the Indemnified Party's defense pursuant to this
Section 7.4 or of the Indemnifying Party's participation
therein at the Indemnified Party's request, and the
Indemnified Party shall reimburse the Indemnifying Party in
full for all reasonable costs and expenses of such litigation.
The Indemnifying Party may participate in, but not control,
any defense or settlement controlled by the Indemnified Party
pursuant to this Section 7.4(c), and the Indemnifying Party
shall bear its own costs and expenses with respect to such
participation.
(d) In the event any Indemnified Party should have a claim against
any Indemnifying Party hereunder that does not involve a Third
Party Claim, the Indemnified Party shall transmit to the
Indemnifying Party a written notice (the "Indemnity Notice")
describing in reasonable detail the nature of the claim, an
estimate of the amount of Losses attributable to that claim to
the extent feasible (which estimate shall not be conclusive of
the final amount of such claim) and the basis of the
Indemnified Party's request for indemnification under this
Agreement. If the Indemnifying Party does not notify the
Indemnified Party within 15 days from its receipt of the
Indemnity Notice that the Indemnifying Party disputes such
claim, the claim specified by the Indemnified Party in the
Indemnity Notice shall be deemed a liability of the
Indemnifying Party hereunder. If the Indemnifying Party has
timely disputed such claim, as provided above,. Such dispute
shall be resolved by proceedings in an appropriate court of
competent jurisdiction if the parties do not reach a
settlement of such dispute within 30 days after notice of a
dispute is given.
(e) Payments of all amounts owing by an Indemnifying Party
pursuant to this Article
36
VII relating to a Third Party Claim shall be made within 30
days after the latest of i) the settlement of that Third Party
Claim, ii) the expiration of the period for appeal of a final
adjudication of that Third Party Claim or iii) the expiration
of the period for appeal of a final adjudication of the
Indemnifying Party's liability to the Indemnified Party under
this Agreement. Payments of all amounts owing by an
Indemnifying Party pursuant to Section 7.4(e) shall be made
within 30 days after the later of i) the settlement of that
claim ii) the expiration of the period for appeal of a final
adjudication of the Indemnifying Party's liability to the
Indemnified Party under this Agreement.
7.5 REMEDIES NOT EXCLUSIVE
The remedies provided in this Agreement shall not be exclusive of any
other rights or remedies available to one Party against the other Party.
ARTICLE VIII
COVENANTS OF ADSERO, YAC, CALLCO AND ACQUIROR
8.1 OPERATION OF THE BUSINESS
Except as contemplated by this Agreement or as expressly agreed to in
writing by Acquiree and the Vendors, during the period from April 1, 2004, to
the Closing, each of Acquiror, YAC, Callco and Adsero has conducted its
operations only in the ordinary course of business consistent with sound
financial, operational and regulatory practice, and has taken no action which
would have a Material Adverse Effect on its ability to consummate the
Transactions required by this Agreement. Without limiting the generality of the
foregoing, except as otherwise expressly provided in this Agreement or related
Schedules, each of Acquiror, YAC, Callco and Adsero did not, prior to the
Closing:
(a) amend their Charter Documents or by-laws (or similar
organizational documents);
(b) recapitalize, split, combine or reclassify any shares of their
respective capital stock; declare, set aside or pay any
dividend or other distribution (whether in cash, stock or
property or any combination thereof) in respect of their
respective capital stock; or purchase, redeem or otherwise
acquire any of its securities or modify any of the terms of
any such securities;
(c) i) except as otherwise disclosed by Adsero, YAC, Callco or
Acquiror in the context of the Transactions herein
contemplated, create, incur, assume or permit to exist any
long-term debt or any short-term debt for borrowed money other
than under existing notes payable, lines of credit or other
credit facilities or in the ordinary course of business; ii)
assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, contingently or otherwise) for
the obligations of any other or iii) make any loans, advances
or capital contributions to, or investments in, any other
Person save and except for the loan agreement and related
collateral agreements entered into with Barrington Bank;
37
(d) i) increase in any manner the rate of compensation of any of
their directors, officers or other employees everywhere, ii)
pay or agree to pay any bonus, pension, retirement allowance,
severance or other employee benefit except as required under
the currently existing profit sharing plan, except for holiday
bonuses in an aggregate amount not to exceed holiday bonuses
for the prior year, or iii) amend, terminate or enter into any
employment, consulting, severance, change in control or
similar agreements or arrangements with any of their
directors, officers or other employees;
(e) except as otherwise disclosed by Adsero, YAC, Callco or
Acquiror in the context of the Transactions herein
contemplated, enter into any material agreement, commitment or
contract, except agreements, commitments or contracts for the
purchase, sale or lease of goods or services in the ordinary
course of business save and except for the loan agreement and
related collateral agreements entered into with Barrington
Bank;
(f) except as contemplated by the Transactions, other than in the
ordinary course of business, authorize, recommend, propose or
announce an intention to authorize, recommend or propose, or
enter into any Contract with respect to, any i) plan of
liquidation or dissolution, ii) acquisition of a material
amount of assets or securities, iii) disposition or
Encumbrance of a material amount of assets or securities, iv)
merger or consolidation or v) material change in their
respective capitalization save and except for the loan
agreement and related collateral agreements entered into with
Barrington Bank;
(g) change any material accounting or Tax procedure or practice;
(h) take any action the taking of which, or knowingly omit to take
any action the omission of which, would cause any of the
representations and warranties herein to fail to be true and
correct in all material respects as of the date of such action
or omission as though made at and as of the date of such
action or omission;
(i) compromise, settle or otherwise modify any material claim or
litigation; or
(j) commit, promise or agree to do any of the foregoing.
8.2 MAINTENANCE OF THE ASSETS
Since April 1, 2004, each of Acquiror, YAC, Callco and Adsero has used
its reasonable best efforts to continue to maintain and service its Assets
consistent with past practice. Each of Acquiror, YAC, Callco and Adsero did not
directly or indirectly, sell or encumber all or any part of the Assets, other
than sales in the ordinary course of business or initiate or participate in any
discussions or negotiations or enter into any agreement to do any of the
foregoing save and except for the loan agreement and related collateral
agreements entered into with Barrington Bank.
8.3 EMPLOYEES AND BUSINESS RELATIONS
Since April 1, 2004, each of Acquiror, YAC, Callco and Adsero has used
commercially reasonable efforts to keep available the services of its current
employees and agents and to
38
maintain its relations and goodwill with its suppliers, customers, distributors
and any others having business relations with it.
8.4 REQUIRED FUNDING
Prior to Closing, Adsero, YAC, Callco and Acquiror have received all
necessary funding to enable them to make all payments required to be made by
them pursuant to this Agreement.
8.5 REQUIRED CONSENTS
Each of Acquiror, YAC, Callco and Adsero have obtained, from regulatory
authorities and third parties, all required consents and approvals necessary for
consummation of the Transactions.
ARTICLE IX
GENERAL MATTERS
9.1 CONTENTS OF AGREEMENT
This Agreement, together with the other Transaction Documents, set
forth the entire understanding of the Parties hereto with respect to the
Transactions and supersedes all prior agreements or understandings among the
Parties regarding those matters.
9.2 PARTIES INTEREST, ASSIGNMENT
This Agreement shall be binding upon and inure to the benefit of and be
enforceable by the respective heirs, legal representatives, successors and
permitted assigns of the Parties hereto. No Party hereto shall assign this
Agreement or any right, benefit or obligation hereunder. Any term or provision
of this Agreement may be waived at any time by the Party entitled to the benefit
thereof by a written instrument duly executed by such Party. The Parties hereto
shall execute and deliver any and all documents and take any and all other
actions that may be deemed reasonably necessary by their respective counsel to
complete the Transactions. Nothing in this Agreement is intended or will be
construed to confer on any Person other than the Parties hereto any rights or
benefits hereunder.
9.3 INTERPRETATION
Unless the context of this Agreement clearly requires otherwise, (a)
references to the plural include the singular, the singular the plural, the part
the whole, (b) references to any gender include all genders, (c) "or" has the
inclusive meaning frequently identified with the phrase "and/or," (d)
"including," "includes" or similar words has the inclusive meaning frequently
identified with the phrase "but not limited to" and (e) references to
"hereunder" or "herein" relate to this Agreement. The section and other headings
contained in this Agreement are for reference purposes only and shall not
control or affect the construction of this Agreement or the interpretation
thereof in any respect. Section, subsection, and Schedule references are to this
Agreement unless otherwise specified. The Schedules referred to in this
Agreement will be
39
deemed to be a part of this Agreement. Each accounting term used herein that is
not specifically defined herein shall have the meaning given to it under
Canadian GAAP.
9.4 NOTICES
All notices that are required or permitted hereunder shall be in
writing and shall be sufficient if personally delivered or sent by a nationally
recognized overnight courier upon proof of delivery. Any notices shall be deemed
given upon receipt at the address set forth below, unless such address is
changed by notice to the other Party hereto:
If to Acquiror: 3091503 Nova Scotia Company
00 Xxxxxxx Xxxxxx, xxxxx 000, Xxxxxxx,
Xxxxxxx, Xxxxxx X0X 0X0
Attention: Xxxxxxx Xxxxx
With a required copy to: GOTTBETTER & PARTNERS, LLP
000 Xxxxxxx Xxx.
12th Fl.
Xxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxxxxx
And copy to: XXXXXXXX NANTEL ATTORNEYS
0000 Xxxxxxxxxx Xxxxxx Xxxx
Xxxxx 000
Xxxxxxxx, Xxxxxx X0X 0X0
Attention: Xxxxxxxxx Xxxxxx
If to Acquiree to: TECKN-O-LASER GLOBAL COMPANY
0000-X, Xxx Xxxxx
Xxxxxx-Xxxxx, Xxxxxx X0X 0X0
Attention: Xxxx Xxxxxxxx
With a required copy to: XXXXXXXX XXXXX ATTORNEYS
0 Xxxxx Xxxxx-Xxxxx
Xxxxx 0000
Xxxxxxxx, Xxxxxx X0X 0X0
Attention: Xxxxxx Xxxxxx
If to TOL Canada: TECKN-O-LASER COMPANY
0000-X, Xxx Xxxxx
Xxxxxx-Xxxxx, Xxxxxx X0X 0X0
Attention: Xxxx Xxxxxxxx
With a required copy to: XXXXXXXX XXXXX ATTORNEYS
0 Xxxxx Xxxxx-Xxxxx
Xxxxx 0000
Xxxxxxxx, Xxxxxx X0X 0X0
Attention: Xxxxxx Xxxxxx
40
If to Adsero to: ADSERO CORP.
00 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx X0X 0X0
Attention: Xxxxxxx Xxxxx
With a required copy to: GOTTBETTER & PARTNERS, LLP
000 Xxxxxxx Xxx.
12th Fl.
Xxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxxxxx
If to Vendors to: 0000-0000 XXXXXX INC.
000 Xxxx xx Xxxxxxxxx Xxxxxx
Xxxxxx Xxxxx, Xxxxxx X0X 0X0
Attention: Xxxxx Xxxxxxxxx
And: 0000-0000 XXXXXX INC.
000 Xxx Xxxx Xxxxxx
Xxxxx-Xxxxx xx Xxxxxxxxxxx, Xxxxxx
X0X 0X0
Attention: Xxxx Xxxxxxxx
And: XXXX XXXXXXXX
000 Xxx Xxxx Xxxxxx
Xxxxx-Xxxxx xx Xxxxxxxxxxx, Xxxxxx
X0X 0X0
And: XXXXX XXXXXXXXX
000 Xxxx xx Xxxxxxxxx Xxxxxx
Xxxxxx Xxxxx, Xxxxxx X0X 0X0
And: XXXXXX XXXXXXX
000 Xxx Xxxx Xxxxxx
Xxxxx-Xxxxx xx Xxxxxxxxxxx, Xxxxxx
X0X 0X0
With a required copy to: XXXXXXXX XXXXX ATTORNEYS
0 Xxxxx Xxxxx-Xxxxx
Xxxxx 0000
Xxxxxxxx, Xxxxxx X0X 0X0
Attention: Xxxxxx Xxxxxx
If to Callco: 3091732 NOVA SCOTIA COMPANY
00 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx, Xxxxxx X0X 0X0
Attention: Xxxxxxx Xxxxx
With required copy to: XXXXXXXX NANTEL ATTORNEYS
0000 Xxxxxxxxxx Xxxxxx Xxxx
Xxxxx 000
41
Xxxxxxxx, Xxxxxx X0X 0X0
Attention: Xxxxxxxxx Xxxxxx
If to YAC: YAC CORP.
00 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx, Xxxxxx X0X 0X0
Attention: Xxxxxxx Xxxxx
With required copy to: GOTTBETTER & PARTNERS, LLP
000 Xxxxxxx Xxx.
12th Fl.
Xxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxxxxx
42
9.5 GOVERNING LAWS
Except with regard to securities law matters concerning the Adsero
Common Shares and the Adsero Series A Preferred Shares, this Agreement shall be
governed by and construed in accordance with the laws of the Province of Quebec
and the laws of Canada applicable therein and the parties agree that the courts
of the Province of Quebec shall have the exclusive jurisdiction to determine all
disputes and claims arising between the parties.
9.6 COUNTERPARTS
This Agreement may be executed in two or more counterparts, each of
which shall be binding as of the date first written above, and all of which
shall constitute one and the same instrument. Each such copy shall be deemed an
original, and it shall not be necessary in making proof of this Agreement to
produce or account for more than one such counterpart.
9.7 WAIVERS
Compliance with the provisions of this Agreement may be waived only by
a written instrument specifically referring to this Agreement and signed by the
Party waiving compliance. No course of dealing, nor any failure or delay in
exercising any right, will be construed as a waiver, and no single or partial
exercise of a right will preclude any other or further exercise of that or any
other right.
9.8 MODIFICATION
No supplement, modification or amendment of this Agreement will be
binding unless made in a written instrument that is signed by each of the
Parties to this Agreement.
9.9 ENFORCEMENT OF AGREEMENT
The parties hereto agree that irreparable damage would occur in the
event that any of the provisions of this Agreement was not performed in
accordance with its specific terms or was otherwise breached. It is accordingly
agreed that the parties shall be entitled to an injunction to prevent breaches
of this Agreement and to enforce specifically the terms and provisions hereof in
any court of competent jurisdiction, this being in addition to any other remedy
to which they are entitled at law or equity.
9.10 SEVERABILITY
If any term or other provision of this Agreement is invalid, illegal or
incapable of being enforced by any rule of law or public policy, all other
conditions and provisions of this Agreement shall nevertheless remain in full
force and effect.
43
9.11 FURTHER ASSURANCES
The Parties hereto agree to execute and deliver such further
instruments and documents as may reasonably be requested by another Party in
order to carry out fully the intent and accomplish the purposes of this Share
Purchase Agreement and the Transactions referred to herein.
9.12 LANGUAGE
The parties hereto have requested that the present agreement be drawn
in the English language. LES PARTIES AUX PRESENTES ONT REQUIS QUE LA PRESENTE
CONVENTION SOIT REDIGEE EN LANGUE ANGLAISE.
IN WITNESS WHEREOF, this Agreement has been executed by the Parties hereto as of
the day and year first written above.
VENDORS: /s/ Xxxx Xxxxxxxx
----------------------------------------
XXXX XXXXXXXX
Xxxxx Xxxxxxxxx
----------------------------------------
XXXXX XXXXXXXXX
/s/ Xxxxxx Xxxxxxx
----------------------------------------
Xxxxxx Xxxxxxx
9144-6773 QUEBEC INC.
/s/ Xxxx Xxxxxxxx
----------------------------------------
Name: Xxxx Xxxxxxxx
Title: President
9144-6909 QUEBEC INC.
/s/ Xxxxx Xxxxxxxxx
----------------------------------------
Name: Xxxxx Xxxxxxxxx
Title: President
ACQUIROR: 3091503 NOVA SCOTIA COMPANY
/s/ Xxxxxxx Xxxxx
----------------------------------------
Name: Xxxxxxx Xxxxx
Title: President
44
ACQUIREE: TECKN-O-LASER GLOBAL COMPANY
/s/ Xxxx Xxxxxxxx
----------------------------------------
Name: Xxxx Xxxxxxxx
Title: President
TOL CANADA TECHN-O-LASER COMPANY
/s/ Xxxx Xxxxxxxx
----------------------------------------
Name: Xxxx Xxxxxxxx
Title: President
ADSERO ADSERO CORP.
/s/ Xxxxxxx Xxxxx
----------------------------------------
Name: Xxxxxxx Xxxxx
Title: CFO
CALLCO 3091732 NOVA SCOTIA COMPANY
/s/ Xxxxxxx Xxxxx
----------------------------------------
Name: Xxxxxxx Xxxxx
Title: President
YAC YAC CORP.
/s/ Xxxxxxx Xxxxx
----------------------------------------
Name: Xxxxxxx Xxxxx
Title: CFO
45
SHARE PURCHASE AGREEMENT
SCHEDULE 1.A
SERIES I EXCHANGEABLE SHARES VOTING AND SUPPORT AGREEMENT
(SEE DOCUMENT ANNEXED)
46
SHARE PURCHASE AGREEMENT
SCHEDULE 1.B
SERIES II EXCHANGEABLE SHARES VOTING AND SUPPORT AGREEMENT
(SEE DOCUMENT ANNEXED)
47
SHARE PURCHASE AGREEMENT
SCHEDULE 1.C
PREFERRED SHARES PURCHASE AND SUPPORT AGREEMENT
(SEE DOCUMENT ANNEXED)
48
SHARE PURCHASE AGREEMENT
SCHEDULE 1.D
DEFINITION OF EBITDA
For the purpose of the Agreement, the EBITDA will be calculated as follows:
o Earnings before interest, taxes, depreciation and amortization of
Acquiree, based on the consolidated audited financial statements of
Acquiree, according to Canadian GAAP;
Plus:
o Earnings before interest, taxes, depreciation and amortization of
TOL USA, based on audited financial statements of TOL USA, according
to Canadian GAAP;
Plus:
o Any adjustment deemed necessary by Adsero Corp.'s Board of Directors
and as agreed to by Xx. Xxxxxxxx;
Plus:
o Any fee or expense paid or incurred by Acquiree, TOL Canada or TOL
USA in connection with the Transaction which was expensed in any of
the calculations for earnings noted above.
49
SCHEDULE 2.1
ISSUED AND OUTSTANDING SHARES OF ACQUIREE
CLASS A CLASS B
COMMON COMMON
NAME OF HOLDER SHARES SHARES
-------------- ------- -------
0000-0000 Xxxxxx Inc.(1) 4,240 -
0000-0000 Xxxxxx Inc.(2) - 1,760
----- -----
TOTAL 4,240 1,760
(1) A holding company controlled by Xxxx Xxxxxxxx
(2) A holding company controlled by Xxxxx Xxxxxxxxx
CLASS A CLASS B CLASS C CLASS D CLASS E CLASS F
PREFERRED PREFERRED PREFERRED PREFERRED PREFERRED PREFERRED
NAME OF HOLDER SHARES SHARES SHARES SHARES SHARES SHARES
-------------- --------- --------- --------- --------- --------- ---------
Xxxx Xxxxxxxx - 221,969 - - - -
Xxxxx Xxxxxxxxx 443,256 57,904 - - - -
9144-6773 Quebec Inc.(1) 1,067,844 - - - 565,333 -
0000-0000 Xxxxxx Inc.(2) - - - - - 234,667
Xxxxxx Xxxxxxx - 176,127 - - - -
--------- ------- --------- ------- ------- -------
TOTAL 1,511,100 456,000 - - 565,333 234,667
(1) A holding company controlled by Xxxx XxxxxxxX
(2) A holding company controlled by Xxxxx XxxxxxxxX
50
SHARE PURCHASE AGREEMENT
SCHEDULE 2.2
PURCHASE PRICE FOR THE ACQUIREE COMMON AND PREFERRED SHARES
PURCHASE PRICE
SHAREHOLDERS ACQUIREE SHARES $
------------------------------------------------------------------------------
Xxxx Xxxxxxxx 000,000 preferred "B" $221,969
------------------------------------------------------------------------------
9144-6773 Qc inc 4,240 common "A" 10,072,686
(Xxxxxxxx Holdco) 1,067,844 preferred "A" 1,067,844
565,333 preferred "E" 565,333
------------------------------------------------------------------------------
Xxxxxx Xxxxxxx 176,127 preferred "B" 176,127
------------------------------------------------------------------------------
Xxxxx Xxxxxxxxx 443,256 preferred "A" 443,256
57,904 preferred "B" 57,904
------------------------------------------------------------------------------
9144-6906 Qc inc 1,760 common "B" 4,181,114
(Lachambre Holdco) 234,667 preferred "F" 234,667
------------------------------------------------------------------------------
TOTAL $17,020,900
------------------------------------------------------------------------------
51
SHARE PURCHASE AGREEMENT
SCHEDULE 2.3
6.7.1 Purchase Price Apportionment
SHARES HELD PURCHASE CONSIDERATION RECEIVED
VENDORS AS AT CLOSING PRICE
----------------------- ---------- ----------------------------------------------------------------
Cash on Balance Acquiror Series I Acquiror Preferred
closing receivable Exchangeable Shares Shares
------- ---------- --------------------- --------------------
$ $ $ Number Value Number Value
=========================================================================================================================
Xxxx Xxxxxxxx 221,969 preferred "B" 221,969 221,969 - - - - -
-------------------------------------------------------------------------------------------------------------------------
9144-6773 Qc inc. 4,240 common "A" 10,072,686 - 1,529,863 4,593,333 7,177,543 1,365,280 1,365,280
(Xxxxxxxx Holdco)
1,067,844 preferred "A" 1,067,844 207,760 860,084 - - - -
565,333 preferred "E" 565,333 - 565,333 - - - -
-------------------------------------------------------------------------------------------------------------------------
Xxxxx Xxxxxxxxx 443,256 preferred "A" 443,256 86,240 357,016 - - - -
57,904 preferred "B" 57,904 57,904 - - - - -
-------------------------------------------------------------------------------------------------------------------------
9144-6906 Qc inc. 1,760 common "B" 4,181,114 - 635,037 1,906,667 2,979,357 566,720 566,720
(Lachambre Holdco)
234,667 preferred "F" 234,667 - 234,667 - - - -
-------------------------------------------------------------------------------------------------------------------------
Xxxxxx Xxxxxxx 176,127 preferred "B" 176,127 176,127 - - - - -
-------------------------------------------------------------------------------------------------------------------------
TOTAL 17,020,900 750,000 4,182,000 6,500,000 10,156,900 1,932,000 1,932,000
-------------------------------------------------------------------------------------------------------------------------
52
SHARE PURCHASE AGREEMENT
SCHEDULE 2.3 A
ADSERO SERIES A PREFERRED SHARES
53
SHARE PURCHASE AGREEMENT
SCHEDULE 2.7
SHARES TRANSFERRED ACCORDING TO THE DISPOSITION OF SECTION 85(1) OF
THE INCOME TAX ACT AND SECTION 518 OF THE TAXATION ACT (QUEBEC)
AGREED AMOUNT
SHARES HELD PURCHASE CONSIDERATION RECEIVED AGREED
VENDORS AS AT CLOSING PRICE AMOUNT
---------------- ---------- ----------------------------------------- ---------
BALANCE ACQUIROR SERIES I ACQUIROR
RECEIVABLE EXCHANGEABLE PREFERRED
SHARES SHARES
---------- ---------- ----------------- --------- ---------
$ $ $ $ $
==========================================================================================================
9144-6773 QC INC. 4,240 common "A" 10,072,686 1,529,863 7,177,543 1,365,280 1,529,863
(XXXXXXXX HOLDCO)
----------------------------------------------------------------------------------------------------------
9144-6906 QC INC. 1,760 common "B" 4,181,114 635,037 2,979,357 566,720 635,037
(LACHAMBRE HOLDCO)
----------------------------------------------------------------------------------------------------------
55
SHARE PURCHASE AGREEMENT
SCHEDULE 2.8
AGREED AMOUNT
56
SHARE PURCHASE AGREEMENT
SCHEDULE 2.10
STOCK OPTIONS
Upon Closing or immediately thereafter, Adsero shall prepare
certificates recognizing the granting of a total of 300,000 Stock Options to
certain employees of TOL Canada and for which Adsero will seek to obtain the
requisite regulatory approvals as soon as possible thereafter. All Stock Options
so granted shall be subject to the conditions outlined in Section 2.10 of this
Agreement.
57
SHARE PURCHASE AGREEMENT
SCHEDULE 2.11.2.1(B)
LOCK-UP AGREEMENT
(SEE DOCUMENT ANNEXED)
58
SHARE PURCHASE AGREEMENT
SCHEDULE 2.11.2.2(B)
ADSERO SERIES A PREFERRED SHARE DESIGNATION
59
SHARE PURCHASE AGREEMENT
SCHEDULE 2.11.2.2(E)
XXXX XXXXXXXX EMPLOYMENT AGREEMENT
(SEE DOCUMENT ANNEXED)
60
SHARE PURCHASE AGREEMENT
SCHEDULE 2.11.2.2(F)
XXXXX XXXXXXXXX EMPLOYMENT AGREEMENT
61
SHARE PURCHASE AGREEMENT
SCHEDULE 3.5.3
ADSERO ISSUED AND OUTSTANDING
OPTIONS AND WARRANTS
&
OTHER COMMITTED ISSUANCES
Total Warrants Outstanding: 5,627,430
Total Options Outstanding: 337,500
(Excluding the 300,000
Stock options to employees
of TOL)
Shares Issuable upon Conversion
of Westminster Capital Note 2,000,000
Shares issuable under private placements 3,257,500
----------
TOTAL: 11,222,430
==========
62
SHARE PURCHASE AGREEMENT
SCHEDULE 3.6
ADSERO FINANCIAL STATEMENTS
63
SHARE PURCHASE AGREEMENT
SCHEDULE 3.15(H)
EXCEPTIONS TO SECTION 3.15(H)
64
SHARE PURCHASE AGREEMENT
SCHEDULE 3.17
FINDER'S FEES
65
SCHEDULE 4.4.1
ACQUIREE'S CAPITALIZATION AND STOCK OWNERSHIP
CLASS A CLASS B
COMMON COMMON
NAME OF HOLDER SHARES SHARES
-------------- ------- -------
0000-0000 Xxxxxx Inc.(1) 4,240 -
0000-0000 Xxxxxx Inc.(2) - 1,760
----- -----
TOTAL 4,240 1,760
(1) A holding company controlled by Xxxx Xxxxxxxx
(2) A holding company controlled by Xxxxx Xxxxxxxxx
CLASS A CLASS B CLASS C CLASS D CLASS E CLASS F
PREFERRED PREFERRED PREFERRED PREFERRED PREFERRED PREFERRED
NAME OF HOLDER SHARES SHARES SHARES SHARES SHARES SHARES
-------------- --------- --------- --------- --------- --------- ---------
Xxxx Xxxxxxxx - 221,969 - - - -
Xxxxx Xxxxxxxxx 443,256 57,904 - - - -
9144-6773 Quebec Inc.(1) 1,067,844 - - - 565,333 -
0000-0000 Xxxxxx Inc.(2) - - - - - 234,667
Xxxxxx Xxxxxxx - 176,127 - - - -
3091503 Nova Scotia Company - - 1,000,000 500,000 - -
--------- ------- --------- ------- ------- -------
TOTAL 1,511,100 456,000 1,000,000 500,000 565,333 234,667
(1) A holding company controlled by Xxxx XxxxxxxX
(2) A holding company controlled by Xxxxx Xxxxxxxxx
66
SCHEDULE 4.8
IMMOVABLE PROPERTY
The Acquiree is the owner of the property described hereunder:
IMMEUBLE 1
Un immeuble connu et designe comme etant compose comme suit :
a) le lot numero VINGT-DEUX de la subdivision du lot
originaire numero DEUX CENT QUATRE-VINGT-QUINZE (295-22) du cadastre de
la Paroisse de Sainte-Xxxxx, circonscription fonciere de VERCHERES;
b) le lot numero SEPT de la subdivision du lot originaire
numero DEUX CENT QUATRE-VINGT-SEIZE (296-7), dudit cadastre.
Avec toutes les batisses y erigees, notamment celle portant le
numero 0000, XXXXXXXXX XXXXX, XXXXXX-XXXXX, XXXXXXXX XX XXXXXX, X0X
0X0.
Tel que le tout se trouve presentement avec toutes les
servitudes actives et passives, apparentes ou occultes attachees a
l'immeuble, sans exception ni reserve et notamment sujet au reglement
de zonage aerien publie sous le numero 135912.
IMMEUBLE II
Un immeuble VACANT connu et designe comme etant compose comme
suit :
a) le lot numero CENT QUATRE-VINGT-HUIT de la subdivision du
lot originaire numero DEUX CENT QUATRE-VINGT-QUINZE (295-188), du
cadastre de la Paroisse de Sainte-Xxxxx, circonscription fonciere de
VERCHERES;
b) le lot numero DEUX CENT SOIXANTE-DEUX de la subdivision du
lot originaire numero DEUX CENT QUATRE-VINGT-QUATORZE (294-262), dudit
cadastre.
Tel que le tout se trouve presentement avec toutes les
servitudes actives et passives, apparentes ou occultes attachees a
l'immeuble, sans exception ni reserve et notamment sujet au reglement
de zonage aerien publie sous le numero 135912 et a la servitude de non
construction creee aux termes de l'acte publie sous le numero 327599.
Le Debiteur hypotheque egalement les biens suivants, pour les
fins et pour la somme (avec les interets) indiquees precedemment au
present article :
1. tous les loyers et revenus produits par l'immeuble, presents et a
venir;
2. tous les biens meubles qui sont presentement ou seront dans l'avenir
materiellement attaches ou reunis a l'immeuble; et
3. les indemnites payables en vertu de tout contrat d'assurance couvrant
l'immeuble et les biens mentionnes aux paragraphes 1 et 2 qui
precedent.
L'immeuble et les autres biens mentionnes ci-dessus sont
collectivement appeles (biens hypotheques). Si l'hypotheque affecte
plus d'un immeuble, le terme (immeuble) designe tous et chacun des
immeubles hypotheques.
A surface of 2 100 square feet is being rented to Thersol inc.
67
SCHEDULE 4.8.2
TITLE TO ASSETS AND RELATED MATTERS
Liens
ACQUIREE
1. An Immovable hypothec dated September 30, 2003, in favour of the
Business Development Bank of Canada to guarantee a three million
dollars (3 000 000 $) loan to Teckn-O-Laser Global Inc. Such hypothec
was granted on two buildings as described hereunder.
IMMEUBLE 1
Un immeuble connu et designe comme etant compose comme suit :
a) le lot numero VINGT-DEUX de la subdivision du lot
originaire numero DEUX CENT QUATRE-VINGT-QUINZE (295-22) du cadastre de
la Paroisse de Sainte-Xxxxx, circonscription fonciere de VERCHERES;
b) le lot numero SEPT de la subdivision du lot originaire
numero DEUX CENT QUATRE-VINGT-SEIZE (296-7), dudit cadastre.
Avec toutes les batisses y erigees, notamment celle portant le
numero 0000, XXXXXXXXX XXXXX, XXXXXX-XXXXX, XXXXXXXX XX XXXXXX, X0X
0X0.
Tel que le tout se trouve presentement avec toutes les
servitudes actives et passives, apparentes ou occultes attachees a
l'immeuble, sans exception ni reserve et notamment sujet au reglement
de zonage aerien publie sous le numero 135912.
IMMEUBLE II
Un immeuble VACANT connu et designe comme etant compose comme
suit :
a) le lot numero CENT QUATRE-VINGT-HUIT de la subdivision du
lot originaire numero DEUX CENT QUATRE-VINGT-QUINZE (295-188), du
cadastre de la Paroisse de Sainte-Xxxxx, circonscription fonciere de
VERCHERES;
b) le lot numero DEUX CENT SOIXANTE-DEUX de la subdivision du
lot originaire numero DEUX CENT QUATRE-VINGT-QUATORZE (294-262), dudit
cadastre.
Tel que le tout se trouve presentement avec toutes les
servitudes actives et passives, apparentes ou occultes attachees a
l'immeuble, sans exception ni reserve et notamment sujet au reglement
de zonage aerien publie sous le numero 135912 et a la servitude de non
construction creee aux termes de l'acte publie sous le numero 327599.
Le Debiteur hypotheque egalement les biens suivants, pour les
fins et pour la somme (avec les interets) indiquees precedemment au
present article:
4. tous les loyers et revenus produits par l'immeuble, presents et a
venir;
5. tous les biens meubles qui sont presentement ou seront dans l'avenir
materiellement attaches ou reunis a l'immeuble; et
6. les indemnites payables en vertu de tout contrat d'assurance couvrant
l'immeuble et les biens mentionnes aux paragraphes 1 et 2 qui
precedent.
L'immeuble et les autres biens mentionnes ci-dessus sont
collectivement appeles (biens hypotheques). Si l'hypotheque affecte
plus d'un immeuble, le terme (immeuble) designe tous et chacun des
immeubles hypotheques.
Servitude
1. An aerial zoning servitude is granted in favour of the St-Xxxxxx
Airport.
68
2. Teckn-O-Laser Global inc. encumbered in favour of the dominant lands
(described hereunder), the land located at 0000, xxxxxxxxx Xxxxx,
Xxxxxx-Xxxxx, xxxxxxxx xx Xxxxxx, X0X 0X0 of a servitude of
non-construction prohibiting any construction or plantation with the
exception of what could be required by municipal by-laws.
DESIGNATION OF THE DOMINANT LANDS
PARCELLE 1
Le lot numero DEUX CENT de la subdivision officielle du lot originaire
numero DEUX CENT QUATRE-VINGT-QUATORZE (294-200), au cadastre officiel
de la Paroisse de Sainte-Xxxxx, circonscription fonciere de VERCHERES.
PARCELLE 2
Le lot numero DEUX CENT UN de la subdivision officielle du lot
originaire numero DEUX CENT QUATRE-VINGT-QUATORZE (294-201), audit
cadastre.
PARCELLE 3
Le lot numero DEUX CENT CINQUANTE-TROIS de la subdivision officielle du
lot originaire numero DEUX CENT QUATRE-VINGT-QUATORZE (294-253), audit
cadastre;
PARCELLE 4
Le lot numero DEUX CENT CINQUANTE-QUATRE de la subdivision officielle
du lot originaire numero DEUX CENT QUATRE-VINGT-QUATORZE (294-254),
audit cadastre;
PARCELLE 5
De forme triangulaire, une PARTIE du lot QUATRE de la subdivision
officielle du lot originaire DEUX CENT QUATRE-VINGT-QUATORZE (294-4
PTIE), audit cadastre, bornee vers le Nord-Est par une partie du lot
294-253, sur une distance de 38,530 metres, vers le Sud-Est par une
partie du lot 294-254, sur une distance de 10,600 metres, vers le
Sud-Ouest par une partie du xxx 000-0, xxx xxx xxxxxxxx xx 37,300
metres, ayant une superficie totale de 197,7 metres carre.
PARCELLE 6
De forme irreguliere, une PARTIE du lot QUATRE de la subdivision
officielle du lot originaire DEUX CENT QUATRE-VINGT-QUATORZE (294-4
PTIE), audit cadastre, bornee vers le Nord-Est par une partie du lot
294 (boulevard Nobel), ayant une courbe de 20,950 metres et un rayon de
159,620 sur une distance de 2,500 metres, vers le Sud-Est par le lot
294-253, sur une distance de 24,974 metres, vers le Sud-Ouest par une
partie du lot 295, sur une distance de 23,114 metres, et vers le
Nord-Ouest par le lot 294-262, sur une distance de 17,520 metres, ayant
une superficie totale de 480,7 metres carres.
PARCELLE 7
Le lot numero TRENTE-TROIS de la subdivision officielle du lot
originaire numero DEUX CENT QUATRE-VINGT-QUINZE (295-33), audit
cadastre;
PARCELLE 8
De forme irreguliere, une PARTIE du lot originaire DEUX CENT
QUATRE-VINGT-QUINZE (295 PTIE), audit cadastre, bornee vers le
Sud-Ouest par une partie du lot 295-22 sur une distance de 33,100
metres, vers le Nord-Ouest par le lot 295-188, sur une distance de
43,780 metres, vers le Nord-Est par une partie du xxx 000-0, xxx xxx
xxxxxxxx xx 23,114 metres, vers le Sud-Est par le lot 295-33, sur une
distance de 7,462 metres, vers le Nord-Est par le lot 295-33, sur une
distance de 26,092 metres et vers le Sud-Est par une partie du xxx
000-0, xxx xxx xxxxxxxx xx 40,570 metres, ayant une superficie totale
de 1 576,6 metres carres.
PARCELLE 9
De forme irreguliere, une PARTIE du lot UN de la subdivision officielle
du lot originaire DEUX CENT QUATRE-VINGT-QUINZE (295-1 PTIE), audit
cadastre, bornee vers le
69
Sud-Ouest par une partie du lot 295-17 (rue Xxxxxxx xx Xxxxx), par une
partie du lot 295 et une partie du lot 295-22, sur une distance de
38,200 metres, vers le Nord-Ouest par une partie du lot 295, sur une
distance de 40,570 metres, vers le Nord-Est par une partie du xxx
000-0, xxx xxx xxxxxxxx xx 37,300 metres et vers le Sud-Est par le lot
295-34, sur une distance de 40,584 metres, ayant une superficie totale
de 1 531,8 metres carres.
PARCELLE 10
Le lot numero TRENTE-QUATRE de la subdivision officielle du lot
originaire numero DEUX CENT QUATRE-VINGT-QUINZE (295-34), audit
cadastre;
PARCELLE 11
Le lot numero TRENTE-DEUX de la subdivision officielle du lot
originaire numero DEUX CENT QUATRE-VINGT-QUINZE (295-32), audit
cadastre;
PARCELLE 12
Le lot numero DEUX CENT SOIXANTE-TROIS de la subdivision officielle du
lot originaire numero DEUX CENT QUATRE-VINGT-QUATORZE (294-263), audit
cadastre; Tous montres sur le plan de compilation de Xxxxxxxx XXXXXXXX,
arpenteur-geometre, du douze octobre deux mille un (2001).
3. A servitude granted in favour of Montreal pipeline Co. Ltd published in
Vercheres under number 46945;
4. Three servitudes granted in favour of Southern Canada Power Co.
published in Vercheres under numbers 50874, 50875 and 82644;
5. A servitude of non-access to the highway published in Vercheres under
number 71935.
Guarantee
A guarantee granted by Teckn-O-Laser Global Inc. in favour of GE VFS Canada
Limited Partnership to secure the leasing of computer technology by
Teckn-O-Laser Inc. A guarantee granted by Teckn-O-Laser Global Inc. in favour of
National Bank of Canada to secure the loan of five million dollars (5 000 000 $)
by Teckn-O-Laser Inc.
TOL CANADA
Movable Hypothecs
A. A movable hypothec granted by Teckn-O-Laser inc. in favour of the
National Bank of Canada to guarantee a five million dollars (5 000 000
$) loan including an additional hypothec in the amount of one million
dollars (1 000 000 $) which hypothec was executed on December 10, 2003
and published on December 12, 2003 at the Personal and Movable Real
Rights Registry Office under number 00-0000000-0000. Such hypothec was
granted on the items described hereunder.
TOUS LES STOCKS DU CLIENT, PRESENT ET FUTURES, OU QU'ILS SE TROUVENT ET
TOUTES LES CREANCES DU CLIENT, PRESENTES ET FUTURES, QUEL QUE SOIT LE
LIEU OU SE TROUVENT LES DEBITEURS DE CES CREANCES.
LE PRODUIT DE TOUTE VENTE, LOCATION OU AUTRE DISPOSITION DE CES BIENS,
TOUTE CREANCE RESULTANT D'UNE VENTE, LOCATION OU AUTRE DISPOSITION DE
CES BIENS, AINSI QUE TOUT BIEN ACQUIS EN REMPLACEMENT DE CEUX-CI.
B. A movable hypothec granted by Teckn-O-Laser inc. in favour of the
National Bank of Canada to guarantee a five million two hundred eighty
thousand dollars (5 280 000 $) loan including an additional hypothec in
the amount of eight hundred eighty thousand dollars ( 880 000 $) which
hypothec was executed on July 3, 2003 and published on July 4, 2003 at
the Personal and Movable Real Rights Registry Office under number
00-0000000-0000. Such hypothec was granted on the items described
hereunder.
70
TOUS LES STOCKS DU CLIENT, PRESENTS ET FUTURS, OU QU'ILS SE TROUVENT ET
TOUTES LES CREANCES DU CLIENT, PRESENTES ET FUTURES, QUEL QUE SOIT LE
LIEU OU SE TROUVENT LES DEBITEURS DE CES CREANCES.
LE PRODUIT DE TOUTE VENTE, LOCATION OU AUTRE DISPOSITION DE CES BIENS,
TOUTE CREANCE RESULTANT D'UNE VENTE, LOCATION OU AUTRE DISPOSITION DE
CES BIENS, AINSI QUE TOUT BIEN ACQUIS EN REMPLACEMENT DE CEUX-CI.
C. A movable hypothec granted by Teckn-O-Laser inc. in favour of the
National Bank of Canada to guarantee a one million two hundred thousand
dollars (1 200 000 $) loan including an additional hypothec in the
amount of two hundred thousand dollars ( 200 000 $) which hypothec was
executed on July 30, 2002 and published on August 1, 2003 at the
Personal and Movable Real Rights Registry Office under number
00-0000000-0000. Such hypothec was granted on the items described
hereunder.
TOUT L'EQUIPEMENT, L'OUTILLAGE ET LE MOBILIER DE BUREAU DU CLIENT,
PRESENTS ET FUTURS.
LE PRODUIT DE TOUTE VENTE, LOCATION OU AUTRE DISPOSITION DE CES BIENS,
TOUTE CREANCE RESULTANT D'UNE VENTE, LOCATION OU AUTRE DISPOSITION DE
CES BIENS, AINSI QUE TOUT BIEN ACQUIS EN REMPLACEMENT DE CEUX-CI.
D. A movable hypothec without delivery granted by Teckn-O-laser inc. in
favour of the Caisse de depot et placement du Quebec to guarantee a six
hundred thousand dollars (600 000 $) loan which hypothec was executed
on March 21, 2001 and published on March 22, 2001 at the Personal and
Movable Real Rights Registry Office under number 00-0000000-0000. Such
hypothec was granted on the items described hereunder.
UNE HYPOTHEQUE SANS DEPOSSESSION GRIEVANT LA TOTALITE DE L'UNIVERSALITE
DE L'ENTREPRISE, DES ELEMENTS D'ACTIF ET DES BIENS CORPORALS ET
INCORPORELS DU CONSTITUANT, DON'T IL EST PROPRIETAIRE ACTUELLEMENT OU
DON'T IL FAIT L'ACQUISITION PAR LA SUITE, DE TOUT GENRE ET NATURE QUE
CE SOIT, PEU IMPORTE OU ILS SONT SITUES. LES BIENS SONT ACTUELLEMENT
SITUES A L'ENTREPRISE SISE AU 0000-X, XXXXXXXXX XXXXX, XXXXXX-XXXXX
(XXXXXX) X0X 0X0.
E. A movable hypothec granted by Teckn-O-Laser inc. in favour of the
Caisse de depot et placement du Quebec to guarantee a one million one
hundred thousand dollars (1 100 000 $) loan including an additional
hypothec in the amount of two hundred twenty thousand dollars ( 220 000
$) which hypothec executed on June 19, 2000 and published on June 21,
2000 at the Personal and Movable Real Rights Registry Office under
number 00-0000000-0000. Such hypothec was granted on the items
described hereunder.
TOUS LES MEUBLES, EQUIPEMENTS, ACCESSOIRES, APPAREILS, INVENTAIRES ET
TOUS AUTRES BIENS UTILISES PAR LA COMPAGNIE DANS LE CADRE DE SES
OPERATIONS.
Lease
The lease of a Bulldog Battery Model 12-125B-13 and of a Xxxxxxx Truck Model
EASI-R30TT between Teckn-O-Laser inc. and Equipements X.X. Xxxxxxxx Ltee
executed on June 20, 2003 and published on September 29, 2003 at the Personal
and Movable Real Rights Registry Office under number 00-0000000-0000.
Bank Act Security - section 427
71
A security was granted by the Borrower in favour of the National Bank of Canada
under section 427 of the Bank Act executed on January 23, 2003 and expiring on
December 31, 2008 registered under the number 01128908 of the Canadian
Securities Registration Systems.
72
SCHEDULE 4.9.5
ENVIRONMENTAL PERMITS
NONE
73
SCHEDULE 4.9.6
HAZARDOUS SUBSTANCES
1. An hydrochloric acid container is held locked in a locker.
2. Properties or Assets to produce, generate, store, handle, transport or
dispose of any Hazardous Substances: None
74
SCHEDULE 4.10.2
CAPITAL EXPENDITURES
NONE
75
SCHEDULE 4.11
EMPLOYEES
The complete list of employees of TOL Canada is attached herewith. There are no
written agreement signed by the employees.
76
SCHEDULE 4.13.1
EMPLOYEE RELATIONS
Further to a judgment granting a petition for certification, a collective
bargaining agreement will be negotiated within the next year with TOL Canada.
77
SCHEDULE 4.14
PROFIT SHARING PLAN
a) TOL Canada has an employee group insurance plan. Complete copy of the
said employee group insurance plan has been provided to the Acquiror.
b) TOL Canada has two profit sharing plans constituted in favour of its
employees. The first one in favour of the workers provide a 10% profit
sharing and the second in favour of the management personnel provide a
5% profit sharing opportunity. Complete copies of the said profit
sharing plans have been provided to the Acquiror.
c) TOL Canada has adopted a general policy handbook for its employees
which provides the rules regarding holidays, sick leave, vacation,
disability, termination and severance pay and establishes the general
policies, procedures and worked-related rules. Complete copy of the
said general policy handbook has been provided to the Acquiror.
d) Automobile allowances: 0.35$/km for travelling expenses incurred for
the benefit of TOL Canada and the Acquiree.
e) Expenses reimbursement: with justification.
78
SCHEDULE 4.15.1
INTELLECTUAL PROPERTY
a) The list of all domain names used by the Acquiree and TOL Canada is
attached herewith.
b) There are no copyrights or patents registered in the name of the
Acquiree and TOL Canada.
c) TOL Canada is the owner of the following trade marks:
i) TECKNOLASER
Registration number: LMC557020
Registration date: January 29, 2002
ii) REFLEXION
Registration number: LMC615814
Registration date: July 27, 2004
TOL Canada also uses the trade xxxx "Evergreen".
d) The description of the computer systems and application software is
attached herewith.
79
SCHEDULE 4.15.2
INTELLECTUAL PROPERTY AGREEMENTS
1. Encumbrances
A movable hypothec without delivery granted by Teckn-O-laser inc. in favour of
the Caisse de depot et placement du Quebec to guarantee a six hundred thousand
dollars (600 000 $) loan which hypothec was executed on March 21, 2001 and
published on March 22, 2001 at the Personal and Movable Real Rights Registry
Office under number 00-0000000-0000. Such hypothec was granted on the items
described hereunder.
UNE HYPOTHEQUE SANS DEPOSSESSION GREVANT LA TOTALITE DE L'UNIVERSALITE DE
L'ENTREPRISE, DES ELEMENTS D'ACTIF ET DES BIENS CORPORELS ET INCORPORELS DU
CONSTITUANT, DONT IL EST PROPRIETAIRE ACTUELLEMENT OU DONT IL FAIT L'ACQUISITION
PAR LA SUITE, DE TOUT GENRE ET NATURE QUE CE SOIT, PEU IMPORTE OU ILS SONT
SITUES. LES BIENS SONT ACTUELLEMENT SITUES A L'ENTREPRISE SISE XX 0000-X,
XXXXXXXXX XXXXX, XXXXXX-XXXXX (XXXXXX) X0X 0X0.
A movable hypothec granted by Teckn-O-Laser inc. in favour of the Caisse de
depot et placement du Quebec to guarantee a one million one hundred thousand
dollars (1 100 000 $) loan including an additional hypothec in the amount of two
hundred twenty thousand dollars ( 220 000 $) which hypothec executed on June 19,
2000 and published on June 21, 2000 at the Personal and Movable Real Rights
Registry Office under number 00-0000000-0000. Such hypothec was granted on the
items described hereunder.
TOUS LES MEUBLES, EQUIPEMENTS, ACCESSOIRES, APPAREILS, INVENTAIRES ET TOUS
AUTRES BIENS UTILISES PAR LA COMPAGNIE DANS LE CADRE DE SES OPERATIONS.
2. Protection of Intellectual Property rights
None
3. Intellectual Property Licensing
None
4. Restrictions on the ability to use the Intellectual Property
None
80
SCHEDULE 4.23
LEASES
1. A lease between Teckn-O-Laser inc. and 401 Magnetic limited for a
premise located at 000 Xxxxxxxx Xxxxx, Xxxxx Xxxx, Xxxxxxx constituted
of units number 41 and 42. The term is five (5) years and sixteen (16)
days commencing the 15th day of September 2000 and expiring the 30th
day of September 2005 for a rent of 8 983.00 $ per annum for the first
year of the term, a rent of 9 674.00 $ per annum for the second year of
the term, a rent of 10 365.00 $ per annum for the third year of the
term, a rent of 11 056.00 $ per annum for the fourth year of the term
and a rent of 11 747.00 $ per annum for the fifth year of the term in
addition to an estimated additional rent representing common area
maintenance, realty taxes and building insurances. An option to renew
the lease has been granted by the landlord for a term not less than
five (5) years.
2. A verbal lease between Teckn-O-Laser Global inc. and Teckn-O-Laser inc.
for a premise located at 0000-X, xxxxxxxxx Xxxxx, Xxxxxx-Xxxxx,
xxxxxxxx xx Xxxxxx, X0X 0X0. There is no term to this lease and the
rent represent 7.55$ per square foot for 70 728 square foot for a total
rent of 534 000$ per annum. Teckn-O-Laser Global inc. is liable for the
taxes, insurance and maintenance of the building, land and parking lot.
81
